EUR/JPY tumbles to lows near 120.70 on JPY buying

The increasing buying interest in the Japanese safe haven is forcing EUR/JPY to recede to sub-121.00 levels and print at the same time fresh 2-day lows.

EUR/JPY weaker on trade concerns

Following three consecutive daily advances, including new 2-month tops in the mid-121.00s, the cross is now facing increasing downside pressure and it has returned to the 120.70/60 band.

In fact, fresh buying interest in the Japanese JPY have resurfaced today after Chinese officials poured cold water over the possibility that the US and China could clinch a definitive trade agreement in the longer run (at least under the Trump’s administration).

Those comments have forced yields of the US 10-year note to drop to fresh lows near 1.74% and the Japanese currency to print fresh peaks vs. both the EUR and the Greenback.

Earlier in the day, the Bank of Japan left its monetary stance unchanged, although it did change the forward guidance to an open ended one, or for as long as necessary. Furthermore, the BoJ linked this new stance on forward guidance to price momentum.

In the euro area, advanced CPI for the month of October is seen at 0.7% YoY and 1.1% when comes to Core CPI. Further data saw flash Q3 GDP expected to grow 1.1% on a yearly basis and 0.2% inter-quarter.

What to look for around JPY

At the moment, the exclusive driver behind the price action around the Japanese Yen is expected to come from the protracted trade war between the US and China and its impact on the prospect for global growth. However, the BoJ could see its objective to push domestic inflation to the bank’s target threatened as well as its mega-loose monetary stance if the currency appreciates more than expected in this potential atmosphere.

EUR/JPY relevant levels

At the moment the cross is losing 0.62% at 120.60 and a breach of 120.35 (low Oct.25) would open the door to 119.67 (100-day SMA) and then 118.73 (55-day SMA). On the upside, the initial hurdle is located at 121.47 (monthly high Oct.31) seconded by 122.11 (200-day SMA) and then 123.35 (monthly high Jul.1).