- EUR / JPY accelerates the decline to the 125.00 zone.
- The buying tone around the US dollar keeps assets with perceived higher risk under pressure.
- The Chinese economy expanded 2.3% in 2020, 2.6% quarter-on-quarter in the fourth quarter.
Another day, another setback at the crossroads EUR/JPY. This time the crossing is approaching the region of 125.00 in the context where the US dollar keeps assets with the highest perceived risk, such as the EUR, under pressure.
EUR / JPY tests the 125.00 level
EUR / JPY goes back for the seventh day in a row Monday, intensifying the rejection from yearly highs near the 127.50 region recorded earlier in the month.
Continued bullish momentum around the US dollar maintains under additional pressure on investors’ risk appetite, hurting the higher yielding EUR and benefiting the safe-haven JPY, despite the publication of positive data in China. In fact, the Chinese economy expanded 2.3% in 2020 and 2.6% quarter-on-quarter in the fourth quarter, while industrial production and retail sales also showed an optimistic performance in December compared to the previous year.
The weak activity in global markets, due to the Martin Luther Kingen Day holiday USA, also runs counter to any serious recovery attempts in the EUR / JPY, leaving price action mainly as a continuation of last friday’s fall.
There is nothing worth mentioning in terms of economic data on Monday’s calendar. Later in the week, both the ECB As the Combat they will hold their monetary policy meetings on Thursday. The continuation of the current accommodative stance of both central banks is widely expected.
Relevant EUR / JPY levels
At the time of writing, the EUR / JPY cross is shedding 0.12% on the day, trading at 125.22. A drop below 125.08 (January 18 low), would target 124.75 (100-day SMA) and 124.55 (50% Fibonacci retracement of the November-January movement). On the other hand, the next resistance is found at 127.49 (high of January 7), followed by 130.18 (high of November 7, 2018) and 133.13 (high of September 21, 2018).
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