EUR/JPY offered, drops to lows near 129.60

EUR/JPY tumbles further south of the 130.00 level.
The firm pace of the greenback weighs on the euro.
Investors’ attention remains on the ECB event on Thursday.

Pablo Piovano FXStreet

The recovery in the dollar adds extra downside pressure to the European currency and drags EUR/JPY to new lows in the 129.60 region.

EUR/JPY weaker, breaks below 130.00

After recording new yearly tops in levels just shy of the 131.00 mark earlier in the week, EUR/JPY faced mounting selling pressure in response to the renewed buying interest in the buck.

The upside momentum in the dollar comes against the steady note in the Japanese yen as well as in US yields, while volatility tracked by the VIX index increased in response to rising coronavirus cases, particularly in India and Japan, undermining the optimism surrounding growth prospects for later in the year.

Nothing scheduled in the euro area, while cautiousness is expected to pick up pace ahead of the ECB gathering on Thursday. So far, consensus among traders expect the Council’s message to fall into the upbeat side when assessing growth and inflation prospects in the region, although the broader accommodative stance in monetary conditions is forecast to remain intact.

EUR/JPY relevant levels

At the moment the cross is down 0.32% at 129.66 and faces immediate contention at 129.26 (50-day SMA) followed by 128.29 (weekly low Mar.24) and finally 127.78 (100-day SMA). On the upside, a surpass of 130.97 (2021 high Apr.20) would pave the way for a test of 131.00 (psychological level) and then 131.98 (2018 high Jul.17).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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