EUR/JPY loses the grip, breaks below 123.00

15 May 2019

  • The cross loses momentum and drops below 123.00.
  • The demand for the Japanese yen picks up pace.
  • US-China trade concerns keep ruling markets’ sentiment.

The now better tone around the Japanese safe haven has forced EUR/JPY to recede from daily highs and return to sub-123.00 levels.

EUR/JPY keeps looking to trade, data

Yesterday’s rebound in the cross has faltered ahead of the key 10-day SMA in the 123.40/45 band, although it managed to close with gains for the day.

However, the Japanese Yen has regained some poise today and forced the cross to give away initial gains and return to the area below 123.00 the figure, where it is now attempting to consolidate.

In the data space, flash German GDP figures for the first quarter came in on the soft side earlier in the session, adding to Tuesday’s poor prints from the ZEW survey and sponsoring fresh weakness in the single currency.

Later in the session, advanced EMU Q1 GDP figures are next of note in Euroland ahead of the slew of data releases in the US economy.

What to look for around JPY

The main driver behind the price action around the Japanese Yen is expected to come from the risk appetite trends and their effects on the safe haven flows. In this regard, the US-China trade concerns and prospects of slowdown in the global economy are seen sustaining the higher demand for JPY on the back of increasing nervousness among investors. On the soft side for JPY, the Bank of Japan remains strongly committed to its QQE programme, which should limit the upside potential in the currency.

EUR/JPY relevant levels

At the moment the cross is gaining 0.01% at 122.80 and faces initial resistance at 123.43 (10-day SMA) followed by 124.40 (21-day SMA) and finally 125.23 (monthly high May 1). On the other hand, a breach of 122.48 (low May 9) would aim for 122.39 (monthly low Jan.15 2017) and then 118.82 (2019 low Jan.3 ‘flash crash’).

Trading foreign exchange on margin carries high potential rewards but also high potential risks that may not be suitable for all investors. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience and risk appetite. Past performance is not indicative of future results, which can vary due to market volatility. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Any opinions, news, research, analyses, prices or other information contained on this website or linked to from this website are provided as general market commentary and do not constitute investment advice. AUSFOREX does not accept liability for any loss or damage, including any loss or profit, which may arise directly or indirectly from use of or reliance on such information.

Register a Demo Account

Test drive our trading platform with a 30 day free trial

Register a Live Account

Get started.Open a Forex and CFD trading account with AUSFOREX now

Deposit Funds

Express way for deposit funds

Live Chat

Chat live with one of our 7*24 hour multilingual customer service team