EUR/JPY sticks to modest recovery gains above mid-157.00s, lacks follow-through

EUR/JPY regains positive traction and snaps a two-day losing streak to over a two-week low.
A combination of factors undermines the safe-haven JPY and lends some support to the cross.
Reduced bets for another ECB rate hike in September might keep a lid on any further upside.

Haresh Menghani FXStreet

The EUR/JPY cross attracts some buying during the Asian session on Thursday and moves away from over a two-week low, around the 156.85 region touched the previous day. Spot prices currently trade just above mid-157.00s, up nearly 0.15% for the day, and for now, seem to have stalled a two-day corrective decline from the highest level since September 2008.

The latest optimism led by signs of easing US-China trade tensions undermines the safe-haven Japanese Yen (JPY) and turns out to be a key factor lending some support to the EUR/JPY cross. It is worth recalling that the US Commerce Department’s Bureau of Industry and Security (BIS) announced on Monday that it is removing 27 Chinese entities from its Unverified List. China welcomed the move and said that it was conducive to normal trade between the two nations. Adding to this, US Secretary of Commerce Gina Raimondo's visit to China on August 27-30, for meetings with senior Chinese officials, further boosts investors' confidence.

Apart from this, the Bank of Japan's (BoJ) dovish stance is seen as another factor weighing on the JPY and acting as a tailwind for the EUR/JPY cross. In fact, the BoJ is the only central bank in the world to maintain negative interest rates. Moreover, policymakers have emphasised that a sustainable pay hike is a prerequisite to consider dismantling the massive monetary stimulus. That said, a host of manufacturing surveys released on Wednesday painted a grim picture of the health of economies across the globe and fueled recession fears. This, in turn, might hold back traders from placing aggressive bearish bets around the JPY.

Furthermore, speculations that the European Central Bank (ECB) will halt its streak of nine consecutive rate hikes in September could further contribute to keeping a lid on the EUR/JPY cross. Money market futures are now pricing in just a 40% chance of a 25 bps lift-off from the ECB in September as compared to roughly a 60% chance priced in ahead of the dismal Euro Zone PMI prints released on Wednesday. The HCOB Flash German Composite PMI missed estimates and fell to 44.7, hitting its lowest since May 2020 and pointing to a deeper economic downturn. This warrants caution before placing bullish bets around the cross.

Technical levels to watch

EUR/JPY

Overview
Today last price	157.54
Today Daily Change	0.22
Today Daily Change %	0.14
Today daily open	157.32

Trends
Daily SMA20	157.46
Daily SMA50	156.66
Daily SMA100	152.58
Daily SMA200	147.55

Levels
Previous Daily High	158.38
Previous Daily Low	156.87
Previous Weekly High	159.34
Previous Weekly Low	157.66
Previous Monthly High	158.05
Previous Monthly Low	151.41
Daily Fibonacci 38.2%	157.45
Daily Fibonacci 61.8%	157.8
Daily Pivot Point S1	156.67
Daily Pivot Point S2	156.02
Daily Pivot Point S3	155.17
Daily Pivot Point R1	158.18
Daily Pivot Point R2	159.03
Daily Pivot Point R3	159.68

Author

Haresh Menghani

FXStreet

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

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.