Heavy As POTUS Goes Into Quarantine; EU Leaders Halfway Through Summit

EUR/JPY trades at Y123.78, 19 pips worse off, after posting two separate legs lower in reaction to two rounds of headlines surrounding the news that a close aide of U.S. President Trump tested positive for coronavirus infection. The initial report inspired some fresh demand for JPY, while the Trump's admission that he will now go into quarantine further bolstered the safe haven currency.

• EU leaders convened for a special European Council summit yesterday. The agenda featured the situation in the Eastern Mediterranean, in Belarus and in Nagorno-Karabakh, relations with China and the poisoning of Alexei Navalny. On the second and final day of the summit, leaders will discuss the single market, industrial policy and digital transformation.
• The European Council paved the way for imposing sanctions on Belarus over the alleged electoral fraud and subsequent violence against protesters, as Cyprus agreed to withdraw its veto as the EU left the door ajar for exerting further pressure on Turkey in its spat with Cyprus.
• The next regular European Council meeting is scheduled for Oct 15-16.
• EUR/JPY has stuck to yesterday's range so far. Bears need a fall through Sep 29 low of Y123.03 before targeting Sep 28 low/61.8% of the Jun 22 - Sep 1 rally at Y122.38/28. On the flip side, a rebound above Sep 30 high of Y124.25 would bring Sep 9 low (an a recent breakout level) at Y124.43 into view.
• EZ CPI data and Spanish unemployment are due in European hours, while ECB's de Guindos, de Cos and Holzmann are set to speak.