EUR/JPY tumbles to 4-week lows in sub-120.00 levels

EUR/JPY comes under pressure below the 120.00 mark.
JPY-buying, weak EUR support the downside.
Attention remains on US CPI and Powell's testimony.

Pablo Piovano FXStreet

EUR/JPY is prolonging the correction lower for yet another session and is now navigating the area of new 4-week lows in the 119.80 region.

EUR/JPY weaker on risk-off mood, JPY-buying

The cross is down for the fourth straight session on Wednesday and it has accelerated the downside after breaking below the critical support in the 120.00 neighbourhood.

Skepticism and lack of progress around the US-China trade negotiations have prompted caution among investors and sparked a wave of buying interest in the safe haven universe, booting the demand for the Japanese yen and dragging US yields lower.

In addition, the better mood around the greenback continues to weigh on the single currency, forcing EUR/USD to drop to new 4-week lows just below 1.10 the figure. Still in the euro area, Industrial Production in the bloc (finally) surprised to the upside today, expanding at a monthly 0.1% during September and contracting 1.7% from a year earlier. Despite the monthly recovery, the sector remains well entrenched into the negative territory, which is expected to keep weighing on the outlook.

Later in the session, the focus of attention will be on US inflation figures and the testimony by Fed’s Powell before the Congress.

EUR/JPY relevant levels

At the moment the cross is retreating 0.15% at 119.81 and a breach of 119.55 (100-day SMA) would expose 119.17 (55-day SMA) and finally 117.07 (monthly low Oct.7). On the flip side, the next up barrier emerges at 120.67 (21-day SMA) seconded by 121.47 (monthly high Oct.31) and then 121.90 (200-day SMA).

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.

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