- EUR/JPY lost upside momentum near 121.20.
- Sideline trade is expected ahead of ECB event.
- Geopolitics, Fed’s rate cut, ECB easing drive the mood today.
Renewed selling pressure around the Japanese Yen has lifted EUR/JPY back above the 121.00 handle on Monday, although the bullish move run out of legs in the 121.15/20 band.
EUR/JPY looks to risk trends, geopolitics
After sixth consecutive daily pullbacks, the cross has started the week on a renewed optimism on the back of some selling bias hitting the Japanese safe haven.
The downside in the cross, in the meantime, remains well contained around the 120.80 region for the time being.
Geopolitical concerns are expected to drive the sentiment in the JPY, with the continuation of the US-Iran effervescence remaining in centre stage and seconded by UK-Iran friction after the Revolutionary Guard seized a UK oil tanker in the key Strait of Hormuz on Friday.
In addition, the European currency is seen under pressure this week in light of the key ECB event on Thursday and the publications of flash PMIs in the bloc and the German IFO indicator.
Furthermore, the likelihood of easing measures by the ECB and prospects of a rate cut by the Federal Reserve as early as next week should continue to be critical drivers for the price action in the cross in the near/medium term.
EUR/JPY relevant levels
At the moment the cross is gaining 0.17% at 121.06 and faces the next up barrier at 121.78 (21-day SMA) seconded by 122.32 (high Jul.10) and then 123.35 (monthly high Jul.1). On the other hand, a breakdown of 120.78 (low Jun.3) would expose 119.33 (low Feb.8 2017) and then 118.82 (2019 low Jan.3).
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