EUR/JPY regains upside traction and approaches 123.00

EUR/JPY bounces off lows and trades closer to the 123.00 level.
Upbeat flash manufacturing PMIs for Europe improve the mood around EUR.
Chief Powell’s testimony takes centre stage later in the NA session.

Pablo Piovano FXStreet

Alternating risk appetite trends appear to be lending some support to the risk complex and push EUR/JPY back to the 123.00 area on Wednesday.

EUR/JPY met support near 122.50, looks to Powell

EUR/JPY now reverses a 3-day negative streak and look to return to the area above 123.00 the figure, as sentiment in the risk-associated universe appears to have regained the smile.

In the meantime, the dollar gives away part of its earlier gains after reaching new 2-month peaks beyond the 94.00 mark when tracked by the US Dollar Index (DXY). It is worth recalling that the demand for the buck gained traction in past session on the back of an alarming increase of coronavirus cases in the Old Continent coupled with the idea that the economic recovery could be losing momentum.

Regarding the latter, advanced manufacturing PMIs measured by Markit showed the sentiment in the sector remains buoyant, with readings in all France, Germany and the broader Euroland coming in above expectations.

Earlier in the session, and on the JPY side, BoJ Governor Haruhiko Kuroda noted the domestic economy is showing some signs of recovery, although a high degree of uncertainty still prevails in the broader scenario.

Later in the session, the US dollar is expected to remain in the centre of the debate in light of the second testimony by Chief Jerome Powell, this time before the House of Representatives.

EUR/JPY relevant levels

At the moment the cross is gaining 0.04% at 122.90 and faces the next up barrier at 124.48 (55-day SMA) followed by 126.46 (weekly high Sep.10) and then 127.07 (2020 high Sep.1). On the opposite direction, a move below 122.51 (monthly low Sep.21) would open the door to 122.27 (100-day SMA) and finally 120.86 (200-day SMA).

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.

EUR/USD accelerates losses, focus is on 1.1800

EUR/USD’s selling pressure is gathering pace now, opening the door to a potential test of the key 1.1800 region sooner rather than later. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and the publication of the FOMC Minutes later in the day.

GBP/USD turns negative near 1.3540

GBP/USD reverses its initial upside momentum and is now adding to previous declines, revisiting at the same time the 1.3540 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold picks pace, flirts with $5,000

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and pushing higher towards the key $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.