The EUR/JPY failed to extend its early-day bearish moves and rose well above 119.820 support levels, mainly due to bullish correction. It seems like a sharp rise in the coronavirus cases in Europe and on-going tensions between the EU-US undermined the shared currency and kept a lid on any additional gains in the pair, at least for now. Currently, the EUR/JPY trading at 120, holding right below an immediate resistance level of 120.193. However, the hopes of the European Union (E.U.) Recovery Fund deal kept the positive tone around EUR/JPY pair high.
The mounting concerns about the second wave of coronavirus outbreak sent investors into the safe-haven assets. The warning of the World Health Organization that indicated the second wave of the virus was picking up the pace once again, with an average of 20,000 new cases per day and 700 daily deaths in the Old Continent. In the meantime, the U.K. reported 149 further coronavirus-related deaths in the past 24 hours, as U.K. health experts warned about an imminent second wave of the virus due to the government early- lifting of lockdown measures.
Moving on, the directionless sentiment surrounding the currency pair could be long-term as the US-EU trade war continues to increase and could see the E.U. and Washington move forward with more tariffs through the rest of the year. Besides this, the shared currency Euro gained further support upon the reports from the President of the European Commission that the European Union (E.U.) Recovery Fund that the deal should be agreed before the summer holidays.
Looking forward, the market participants will keep their eyes on the broader market sentiment on Friday. The European Central Bank President Lagarde will be under the close eye during her speech at 07:00 GMT, as she will likely reiterate willingness to provide additional stimulus and stress the requirement for more work on the fiscal front.
Despite positive fundamentals, the reason for opening a sell trade was to capture a quick sell in the EUR/JPY. As you can see on the hourly timeframe, the EUR/JPY has closed shooting star right below downward trendline and 50 periods EMA which suggests bearish sentiment amount investors. Thus, we entered a sell position below 119.934 to target 119.534 today.
Entry Price – Sell 119.934
Stop Loss – 120.334
Take Profit – 119.534
Risk to Reward – 1
Profit & Loss Per Standard Lot = -$374/ +$374
Profit & Loss Per Micro Lot = -$37.4/ +$37.4