• Italian politics keep exerting pressure on the shared currency.
• Disappointing EZ PMIs further aggravates the selling pressure.
• Reviving safe-haven demand adds to the bearish sentiment.
The EUR/JPY cross came under some intense selling pressure on Wednesday and tumbled to 9-month lows during the early European session.
The cross extended overnight rejection slide from 50-day SMA immediate hurdle, levels beyond the 131.00 mark, and continued to be weighed down by growing market anxiety over the antiestablishment partnership in Italy.
This coupled with a fresh wave of global risk-aversion trade, as depicted by a sell-off across equity markets, underpinned the Japanese Yen's safe-haven demand and kept exerting downward pressure on Wednesday.
Meanwhile, the disappointing release of EZ PMI prints for May did little to provide any respite to the already weaker sentiment surrounding the shared currency, in fact further collaborated towards accelerating the bearish fall.
With today's sharp fall, the cross has now eroded nearly 300-pips over the past 24-hours and is currently placed at its lowest level since August 2017, though off around 20-30 pips from lows.
Technical levels to watch
Any subsequent weakness below mid-128.00s is likely to find support near the 128.00 handle, which if broken is likely to aggravate the selling pressure and drag the cross towards its next support near the 127.60-55 region.
On the flip side, any meaningful recovery attempt might now confront fresh supply near the 129.20 area, above which a bout of short-covering might assist the cross to reclaim the key 130.00 psychological mark.
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