EUR/JPY remains depressed below 129.00 as risk-off dominates
- EUR/JPY’s weakness hast retested recent lows around the 128.00 level.
- New strain of COVID heavily weighs on investors’ sentiment.
- The Japanese yen surges along with the risk aversion.
The strong buying interest around the Japanese yen puts EUR/JPY under extra pressure in the sub-129.00 levels so far on Friday.
EUR/JPY weaker on coronavirus headlines
EUR/JPY retreats for the third session in a row and challenged the area of recent tops in the 128.00 neighbourhood on Friday, although it managed to regain some upside traction soon afterwards.
The risk aversion mood irrupted into the markets at the end of the week in response to the resurgence of coronavirus concerns, all after a new variant appeared in Southern Africa. Fanning the flames, this new variant comes at a time where COVID cases are already increasing at quite an alarming pace in the old continent.
The prevailing risk aversion lends extra oxygen to the demand of the Japanese safe haven, while the moderate decline in US yields sponsors the daily pullback in the greenback.
In the euro docket, the German Import Prices rose more than estimated in October: 3.8% MoM and 21.7%. YoY. In addition, the ECB’s M3 Money Supply expanded at an annualized 7.7% during October.
EUR/JPY relevant levels
So far, the cross is losing 0.63% at 128.40 and a surpass of 129.59 (weekly high Nov.23) would expose 130.04 (100-day SMA) and then 130.54 (200-day SMA). On the downside, the next support comes at 127.97 (monthly low Nov.19) followed by 127.93 (monthly low Sep.22) and finally 125.08 (2021 low Jan.18).
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.
