EUR/JPY regains traction and now looks to 122.00

  • EUR/JPY picks up further pace and approaches 122.00.
  • JPY-selling keeps fuelling the upside in the cross.
  • The cross reverses three day with losses.

The better tone in the riskier assets is now fuelling the selling pressure around the Japanese safe haven, in turn lending extra support to EUR/JPY.

EUR/JPY firmer, targets the 122.00 handle

After three consecutive daily pullbacks, the cross has now regained some shine and is once again testing the boundaries of 122.00 the figure.

The up move in the cross also comes in tandem with the rebound in yields of the key US 10-year note to the proximity of 2.12%, which in turn supports the downside pressure in the Japanese Yen.

In the meantime, markets appear sidelined ahead of the critical FOMC meeting on Wednesday, which has gained relevance as of late in response to rising speculations of rate cuts from the Fed. Further out, US-China trade dispute now looks to the potential Xi-Trump meeting at the upcoming G-20 meeting later in the month in Japan.

Later in the week, the FOMC meeting should grab all the attention, while the ECB Forum in Sintra could bring in some volatility around EUR.

What to look for around JPY

The main driver behind the price action around the Japanese Yen is expected to come from the risk appetite trends and their effects on the safe haven flows. In this regard, the US-China trade concerns plus rising geopolitical fears from US-Iran friction and the potential slowdown in the global economy are seen sustaining the higher demand for JPY. On the soft side for JPY, although largely priced in by investors, the Bank of Japan remains strongly committed to its QQE programme.

EUR/JPY relevant levels

At the moment the cross is gaining 0.29% at 122.04 and faces the next hurdle at 123.17 (high Jun.11) seconded by 123.75 (high May 21) and finally 124.49 (100-day SMA). On the other hand, a breakdown of 121.59 (low Jun.17) would expose 120.78 (low Jun.3) and then 120.54 (monthly low Jan.17 2017).

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