|

EUR/JPY retreats further from multi-year peak, drops to 155.00 on dismal Eurozone PMIs

  • EUR/JPY meets with heavy supply on Friday and corrects sharply from a multi-year top.
  • The disappointing Eurozone PMIs undermine the shared currency and exert pressure.
  • The BoJ’s dovish outlook might continue to weigh on the JPY and limit further losses.

The EUR/JPY cross comes under intense selling pressure on Friday and snaps a two-day winning streak to its highest level since September 2008, around the 157.00 neighbourhood touched the previous day. The intraday downward trajectory picks up pace during the early European session and drags spot prices to a fresh daily low, around the 155.00 psychological mark in the last hour.

The shared currency takes a hit following the rather disappointing release of Eurozone PMI prints, which, in turn, is seen as a key factor behind the latest leg of a sudden drop for the EUR/JPY cross. In fact, S&P Global's preliminary report pointed to a sharp slowdown in business activity in France and Germany - the Eurozone's two largest economies. This comes on the back of worries about economic headwinds stemming from rapidly rising borrowing costs, which, to a larger extent, offsets the European Central Bank's hawkish outlook and does little to impress the Euro bulls.

The Japanese Yen (JPY), on the other hand, attracts some haven flows in the wake of the prevalent risk-off environment and is further underpinned by stronger domestic inflation data released earlier this Friday. In fact, Japan's Nationwide Core Consumer Price Index (CPI), which excludes fresh food but includes energy items, eased from 3.4% to 3.2% in May, though surpass market estimates. Furthermore, the gauge excluding fuel costs rose at the fastest annual pace in 42 years, highlighting that the underlying inflation remained heated and put pressure on the Bank of Japan (BoJ).

The Japanese central bank, however, recently reiterated that it has no plans to alter its ultra-loose policy. This marks a bid divergence in comparison to a more hawkish stance adopted by other major central banks, which might continue to undermine the JPY and help limit losses for the EUR/JPY cross. This, in turn, suggests that the ongoing corrective pullback is solely led by some long-unwinding heading into the weekend. Nevertheless, spot prices now seem to have erased a major part of the weekly gains. That said, any subsequent fall is more likely to attract fresh buyers and remain limited.

Technical levels to watch

EUR/JPY

Overview
Today last price155.31
Today Daily Change-1.48
Today Daily Change %-0.94
Today daily open156.79
 
Trends
Daily SMA20151.6
Daily SMA50149.68
Daily SMA100146.47
Daily SMA200144.73
 
Levels
Previous Daily High156.93
Previous Daily Low155.61
Previous Weekly High155.27
Previous Weekly Low149.67
Previous Monthly High151.62
Previous Monthly Low146.14
Daily Fibonacci 38.2%156.43
Daily Fibonacci 61.8%156.12
Daily Pivot Point S1155.96
Daily Pivot Point S2155.13
Daily Pivot Point S3154.64
Daily Pivot Point R1157.27
Daily Pivot Point R2157.76
Daily Pivot Point R3158.59

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

GBP/USD grinds higher to 1.3650 as USD recovery falters

GBP/USD grinds higher to near 1.3650 in Tuesday's European session. The US Dollar recovery falters, despite US sanctions on Iran, as hopes for diplomatic efforts creep back amid reports that Pakistan is carrying an offer to Iran to halt the siege and lift sanctions under the Memorandum of Understanding.

EUR/USD recovers toward 1.1700 as USD loses traction

EUR/USD is recovering ground toward 1.1700 in European trading on Tuesday. The pair draws support as the US Dollar rebound loses traction amid fresh diplomacy hopes in the Middle East conflict. An upbeat German IFO Survey also aids Euro bulls.

Gold remains depressed below $4,650 on firmer USD, Fed risks, and Middle East tensions

Gold remains on the back foot below $4,650 through the first half of the European session. However, the lack of follow-through selling warrants caution before positioning for an extension of the intraday retracement slide from the $4,700 neighborhood, or the highest level since May 14, touched earlier this Tuesday. The US Dollar is seen building on its recovery from a three-month low as inflation risks stemming from volatile energy prices keep bets for at least one interest rate hike by the US Federal Reserve on the table.

Bitcoin's rally above $80,000 shows signs of overheating 

Bitcoin extends gains, trading above $80,000 at the time of writing on Tuesday following its strongest weekly rise in more than three years. Institutional demand continues to support this rally, with spot Exchange Traded Funds recording positive inflows on Monday.

Iran and Fed outlook remain uncertain after Bessent’s comments and ahead of Jackson Hole

Asia Market Update: Directionless trading continues for a 2nd straight session; Iran and Fed outlook remain uncertain after Bessent’s comments and ahead of Jackson Hole; Oman’s Foreign Minister will visit Tehran to Tues, Pakistan commented on MOU.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.