EUR/JPY tumbles to 4-week lows near 117.40

EUR/JPY grinds lower to the mid-117.00s.
JPY-buying keeps weighing on the cross.
US ADP report next of relevance in the data universe.

Pablo Piovano FXStreet

The renewed pick up in the demand for the Japanese safe haven have been weighing on EUR/JPY today, dragging it to fresh 4-week lows in the vicinity of 117.40.

EUR/JPY focused on risk aversion, data

The horrible print from the US ISM manufacturing on Tuesday has re-opened the door to now increasing speculations that the US economy could slip into recession at some point in the next couple of years. The news weighed on the buck and dragged US yields lower along with the renewed buying interest in the Japanese JPY, all rendering in extra downside pressure to the cross.

In addition, and despite the rebound in past hours, the outlook around EUR stays fragile to say the least, with rising likeliness of further retracements along the road.

Data wise today, the most relevant publication will be the ADP in the US economy, which should give an idea of how the employment in the US private sector fared during September.

On the US-China trade front, there is no news so far today ahead of the resumption of high-level talks between both parties on October 10^th in Washington.

In addition, risk trends remain wary of the Brexit process and the speech by PM Boris Johnson at the Tory Party conference.

EUR/JPY relevant levels

At the moment the cross is retreating 0.23% at 117.51 and a breach of 117.37 (monthly low Oct.2) would expose 116.56 (low Aug.26) and finally 115.86 (2019 low Sep.3). On the flip side, the initial resistance aligns at 118.68 (55-day SMA) seconded by 120.01 (monthly high Sep.13) and then 120.20 (100-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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