- EUR / JPY loses a significant part of Monday’s gains.
- Germany’s final second quarter GDP surprised to the upside.
The general consolidation mood in global markets makes the EUR/JPY trade within a tight range below 129.00 on Tuesday.
EUR / JPY focused on risk trends, Jackson Hole
The EUR / JPY has been rejected from the highs recently touched at the 129.00 zone, the area coinciding with the key 200-day SMA, following a moderate rebound from last week’s lows at levels just below 128.00.
The current calm mood in global markets follows growing caution ahead of the Jackson Hole Symposium on August 26-28, and in particular President Powell’s speech on Friday.
In fact, Powell’s speech will be watched closely for details on any indication of the timing of the Fed’s phasing out of QE, as well as a possible move in Fed funds earlier than anticipated.
Meanwhile, yields on the key US 10-year bond remain in a consolidation pattern below the 1.30% level so far.
Data from the economic calendar showed that the German economy expanded 1.6% quarter-on-quarter in the second quarter and 9.4% compared to the same period in 2020.
Technical levels
So far, the cross is losing 0.05% at 128.76 and faces the next support at 127.93 (August 19 monthly low) followed by 127.02 (78.6% Fibonacci from the March-June rally) and finally 126.00 (round level). On the upside, a breakout of 129.09 (200-day SMA) would expose 130.01 (Aug 5 high) and then 130.56 (Jul 29 weekly high).
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