EUR/JPY reverses gains and trades close to 124.00

The renewed demand for the safe haven yen forces EUR/JPY to abandon the area of recent peaks in the 125.00 neighbourhood on Wednesday. EUR/JPY meets r  |  21/10/2020 12:30
  • The upside momentum in EUR/JPY lost impulse in the 125.00 area.
  • Rumours around further US stimulus hurt the greenback.
  • Markets’ attention stays on the advance of the COVID-19 pandemic.

The renewed demand for the safe haven yen forces EUR/JPY to abandon the area of recent peaks in the 125.00 neighbourhood on Wednesday.

EUR/JPY meets resistance around 125.00

EUR/JPY reverses a 3-day positive streak in spite of the persistent improvement in the sentiment surrounding the risk complex.

In fact, market chatter around the US potential extra stimulus package keeps the dollar under heavy pressure for yet another session, particularly after latest news citing both US Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi could resume talks as soon as later in the evening.

Nothing scheduled data wise in Euroland, while ECB’s Luis De Guindos said earlier in the session that an early removal of current stimulus carries the potential to hurt the incipient recovery in the region and warned at the same time against financial risks stemming from mounting debt. Later in the session, another speech by De Guindos is due along with a speech by board member Phillip Lane.

In the US calendar, all the attention is expected to gyrate around the publication of the Fed’s Beige Book later in the session.

EUR/JPY relevant levels

At the moment the cross is losing 0.29% at 124.33 and a drop below 123.50 (100-day SMA) would aim for 123.01 (monthly low Oct.15) and finally 122.37 (monthly low Sep.28). On the flip side, the next up barrier is located at 125.08 (monthly high Oct.9) seconded by 126.46 (weekly high Sep.10) and then 127.07 (2020 high Sep.1).

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