- EUR / JPY loses ground and tests lows near 129.60.
- Further weakness could prompt a retest of the 200-day SMA.
- The markets’ attention now turns to the US CPI (Tuesday).
Continued bullish sentiment around the dollar puts the single currency under pressure and forces the EUR / JPY to drop to multi-day lows in the 129.60 region.
EUR / JPY at risk of a visit to the 200-day SMA
EUR / JPY starts the week lower and leaves Friday’s advance behind in the context of a greater recovery in the dollar and the depressed mood around the risk space.
In fact, the dollar is pushing higher and approaching the key barrier at the 93.00 mark when tracked by the US Dollar Index (DXY) at the beginning of the week. The dollar rally comes despite the steady mood in 10-year US benchmark yields around the 1.33% level.
There is nothing relevant on the national agenda after German wholesale prices rose 0.5% YoY and 12.3% YoY in August. During the first commercial exchanges, producer prices in Japan shot up in the inter-month of August and rose 5.5%. Additionally, the BSI Large Manufacturing Index hit 7.0 qoq in the third quarter.
No data released Monday in the United States should lead to US inflation figures measured by the CPI taking center stage on Tuesday.
Technical levels
So far, the cross is shedding 0.05% to 129.71 and a breakout of 130.74 (September 3 monthly high) would expose 131.07 (100-day SMA) and then 131.75 (61.8% Fibonacci from June-August dip). On the downside, the next support comes at 129.59 (September 13 low) followed by 129.49 (200-day SMA) and finally 128.59 (July 20 monthly low).
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