EUR / JPY falls to fresh 3-week lows near 129.00

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  • EUR / JPY is sinking well below 130.00.
  • The higher demand for the Japanese yen weighs on the cross.
  • Yields on US 10-year bonds fall to weekly lows close to 1.26%.

Improving sentiment in the Japanese safe haven forces EUR / JPY to lose more ground and trade closer to the 129.00 level, or new 3-week lows.

EUR / JPY looking at risk trends

EUR / JPY loses ground for the second session in a row and extends the recent breakout of the critical 200-day SMA (129.52), simultaneously opening the door for more losses on the short-term horizon.

The Japanese yen takes an additional pace and weighs heavily on the crossover amid growing dollar weakness and a deeper pullback in 10-year US yields further south of the 1.30% level to record new weekly lows.

On the euro agenda, Industrial Production in the euro area exceeded expectations in July, expanding 1.5% month-on-month and 7.7% in the last twelve months. During early trading, the corresponding tertiary industry activity index in Japan contracted 0.6% in July from the previous month.

Technical levels

So far, the cross is down 0.18% to 129.20 and an overshoot of 129.81 (55-day SMA) would point to a move to 130.29 (38.2% Fibonacci from the June-August dip) and then to 130.74. (monthly maximum of September 3). On the downside, the next support comes at 128.59 (July 20 monthly low) followed by 127.93 (August 19 monthly low) and 125.87 (200-week SMA).

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