- Risk appetite worsened during US trade, forcing EUR/JPY to give back earlier session gains.
- Amid fears that Russia is on the verge of invading Ukraine, the pair fell back to the 130.00 zone.
Risk appetite worsened during US trading hours on Wednesday, forcing the pair EUR/JPY to trim gains from earlier in the session that took it down to the 130.70 level. Since then, the pair has fallen back to the 130.00 area, where it is now trading down 0.2% on the day versus gains of 0.3% at session highs.
Market commentators cite the growing risk of a Russian military incursion into Ukraine as the main reason for the drop in confidence during US trade Reports suggesting that US intelligence warned Ukraine about the plans Russians to invade within 48 hours and Ukraine has just passed a state of emergency and urged its citizens to flee Russia.
Despite choppy two-way trading on Wednesday that saw EUR/JPY oscillate within a 70+ pip range, the day’s volatility has remained easily contained within Tuesday’s 129.40-130.80 ranges. Indeed, as market participants continue to monitor the unpredictable geopolitical landscape and react to headline-by-headline developments, trading conditions are likely to remain choppy and difficult.
To the downside, weekly lows around 129.40 are the main support to watch and below is the long-term uptrend from Nov 2020. Given the ECB’s ongoing aggressive shift to admit it will tighten in Q4 this year (see comments from Philip Lanes of the ECB on Wednesday), a long-term move below 129.00 seems unlikely.
Additional technical levels
Source: Fx Street
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