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EUR/JPY gyrates around 118.50 sustained by risk appetite

  • EUR/JPY rebounds to the mid-1198.00s on Monday.
  • JPY-selling picks up pace on risk-on trading.
  • EMU final CPI rose 1.0% YoY, less than expected.

The risk-on trade appears to have regained the upper hand among traders at the beginning of the week and is now lifting EUR/JPY to the 118.50/60 band, or fresh 2-day highs.

EUR/JPY tests the 10-day SMA in the mid-118.00s

The cross is adding to Friday’s gains above 118.00 the figure today on the back of the better mood in the risk-associated space, which in turn stays underpinned by mitigated trade concerns.

In fact, the ‘flight-to-safety’ trend appears to have lost some tailwinds as of late, propping up the sell off in bonds and safe havens and thus sponsoring the downside in JPY.

In the docket, July’s final inflation figures in Euroland tracked by the headline CPI showed consumer prices contracted 0.5% MoM and rose 1.0% from a year earlier, both prints coming in short of the preliminary readings.

Later in the week, and amidst the absence of significant releases, the Jackson Hole Symposium on ‘Challenges for Monetary Policy’ should grab all the attention along with the speech by Chief Powell on Friday.

EUR/JPY relevant levels

At the moment the cross is up 0.31% at 118.39 and faces the next hurdle at 119.40 (21-day SMA) followed by 119.87 (high Aug.6) and then 120.93 (55-day SMA). On the downside, a breach of 117.51 (2019 low Aug.12) would open the door to 114.85 (2017 low Apr.17) and finally 113.71 (monthly low Nov.9 2016).

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