- EUR / JPY breaks below 129.00 to fresh 4-month lows.
- Risk-off sentiment deflates a bit on Tuesday.
The EUR/JPY it bounces away from lows in the 128.90 / 85 area at the reversal on Tuesday.
EUR / JPY remains capped at 129.50
The EUR / JPY weekly decline appears to have found decent containment at the 128.90 / 85 zone so far.
In fact, the prevailing risk aversion now appears to be diminished and allows for a slight recovery in the risk complex, helping the crossover to regain some oxygen around the 129.00 zone.
Renewed fears of the coronavirus have sustained entries into the safe-haven space in past sessions, at the same time underpinning the momentum of the Japanese yen and the dollar, and keeping yields bearish.
Furthermore, the current oversold condition of the cross, according to the daily RSI, could provoke a short-term technical rally, although the chances of a visit to the 200-day SMA, today at 128.35, remain high.
Earlier in the session, German producer prices beat consensus in June, rising 1.3% month-on-month and 8.5% year-on-year. Furthermore, the current account surplus in Euroland fell to € 4.3 billion during May.
So far, the cross is gaining 0.07% to 129.07 and an overshoot of 130.00 (psychological level) would expose 131.08 (weekly high on July 13) and then 132.43 (monthly high on July 1). On the downside, immediate support is located at 128.87 (July 20 monthly low) followed by 128.54 (61.8% Fibonacci from the January-June rally) and finally 128.35 (200-day SMA).