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FOREX: EURJPY Underperforms Following Weaker Eurozone Data

FOREX
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  • The Euro has come under solid pressure on Monday amid a broad set of weaker-than-expected Eurozone PMI data. Concerns regarding the growth outlook in both France and Germany, and the associated dovish ECB repricing, has weighed particularly on EURJPY given the ongoing sensitivity of the Japanese yen to adjustments in core fixed income markets.
  • EURJPY trades 0.70% lower today having been as low as 159.05 in early trade. A bear cycle remains intact and the last week’s recovery is considered corrective. Moving average studies are in a bear-mode position and this continues to highlight a dominant downtrend. An extension lower would refocus attention on the key support at 154.42, the Aug 5 low.
  • There remains a strong cluster of support between 153.49-154.42 (shown below) and pivot support at 151.69 remains a notable target should we see a deeper correction lower.
  • Upside risks for the cross are centred around the latest BOJ rhetoric. As a reminder, yen strengthening over the past two months has eased upside inflation risks and made a rate hike less necessary in the short term, Bank of Japan Governor Kazuo Ueda said on Friday. Resistance for the cross moves down to 161.76, the 50-day EMA.
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  • The Euro has come under solid pressure on Monday amid a broad set of weaker-than-expected Eurozone PMI data. Concerns regarding the growth outlook in both France and Germany, and the associated dovish ECB repricing, has weighed particularly on EURJPY given the ongoing sensitivity of the Japanese yen to adjustments in core fixed income markets.
  • EURJPY trades 0.70% lower today having been as low as 159.05 in early trade. A bear cycle remains intact and the last week’s recovery is considered corrective. Moving average studies are in a bear-mode position and this continues to highlight a dominant downtrend. An extension lower would refocus attention on the key support at 154.42, the Aug 5 low.
  • There remains a strong cluster of support between 153.49-154.42 (shown below) and pivot support at 151.69 remains a notable target should we see a deeper correction lower.
  • Upside risks for the cross are centred around the latest BOJ rhetoric. As a reminder, yen strengthening over the past two months has eased upside inflation risks and made a rate hike less necessary in the short term, Bank of Japan Governor Kazuo Ueda said on Friday. Resistance for the cross moves down to 161.76, the 50-day EMA.