EUR/JPY trims losses and retakes the 129.70 area

  • EUR/JPY loses ground and tests lows near 129.60.
  • Further weakness could see the 200-day SMA re-tested.
  • Markets’ attention now looks to the US CPI (Tuesday).

The continuation of the upbeat sentiment surrounding the dollar puts the single currency under pressure and forces EUR/JPY to drop to multi-day lows in the 129.60 region.

EUR/JPY risks a visit to the 200-day SMA

EUR/JPY starts the week on the backfooting and leaves behind Friday’s advance against the backdrop of further recovery in the greenback and the depressed mood around the risk complex.

Indeed, the dollar pushes higher and approaches the key barrier at the 93.00 mark when tracked by the US Dollar Index (DXY) at the beginning of the week. The recovery in the buck comes despite the steady mood in yields of the US 10-year reference around the 1.33% level.

Nothing relevant in the domestic docket after German Wholesale Prices rose 0.5% MoM and 12.3% YoY in August. During early trade, Producer Prices in Japan came in flat inter-month in August and went up 5.5% YoY. In addition, the BSI Large Manufacturing Index came in at 7.0 QoQ in Q3.

No data releases in the US docket on Monday should prompt the US inflation figures gauged by the CPI to take centre stage on Tuesday.

EUR/JPY relevant levels

So far, the cross is losing 0.05% at 129.71 and a surpass of 130.74 (monthly high Sep.3) would expose 131.07 (100-day SMA) and then 131.75 (61.8% Fibo of the June-August drop). On the downside, the next support comes in at 129.59 (low Sep.13) seconded by 129.49 (200-day SMA) and finally 128.59 (monthly low Jul.20).

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