The EUR/JPY failed to stop its previous session bearish streak and drew further offers around the 124.17 regions. However, the basis for the bearish sentiment around the EURJPY pair could be associated with the fresh reports suggesting the re-imposition of stricter restrictions in Germany, Spain, and France to stop the coronavirus second-wave. This, in turn, weakened the forecast around the shared currency and dragged the currency pair lower. Apart from this, the intensification of the Sino-American tussle and the uncertainty over the American stimulus package, keep weighing on the market risk-tone, which eventually underpinned the Japanese yen’s safe-haven demand and contributed to the currency pair losses. Moreover, the risk-off market sentiment was further boosted by the fresh discouraging vaccine news, which put a further bid under the safe-haven Japanese yen. At this particular time, the EUR/JPY is trading at 124.29 and consolidating between 124.17 – 124.48.
The shared currency remained pressured by the vaccine news and re-imposed stricter restrictions in Spain and France, and Germany to stop the coronavirus second-wave. New infections in Germany once again top 4000 on Tuesday. According to the coronavirus (COVID-19) data from Germany’s Robert Koch Institute (RKI), the country’s cases rose around ~39,000 as of yesterday while the latest update today added 13 deaths more so that brings the total tally to 9,634 persons. This, in turn, undermined the shared currency and contributed to the currency pair.
Moreover, the sentiment around the shard currency was further bolstered by the reports suggesting that the UK pharma giant, Johnson, and Johnson, delayed its COVID-19 vaccine trial due to an unexplained illness.
Across the pond, the market trading sentiment has been flashing mixed signals since the day started. Be it the American lawmakers’ failure to offer any positive announcement on the coronavirus (COVID-19) relief package or the recent escalation in the Sino-American tussle, not to forget the Brexit worries, these all factors have been weighing on the market risk tone. At the US-China front, China recently showed his dislikes over the White House arms sale to Taiwan and the recent ban from China to use Aussie coal for power stations, which eventually offered additional pressure to the market sentiment and contributed to the currency pair losses.
Moving on, the ZEW will release its German Economic Sentiment Index and the Current Situation Index at 0900 GMT in the EU session later today, which is expected to drop to 73.0 in October as against a 77.4 reading booked in the previous month. Meanwhile, the Current Situation Sub-Index is expected to arrive at -60.0 against a -66.2-figure recorded last month. Apart from this, the market traders will keep their eyes on the US Consumer Price Index (CPI) data. Furthermore, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will not lose their importance.
Daily Support and Resistance
S1 121.85
S2 122.64
S3 123.04
Pivot Point 123.43
R1 123.83
R2 124.22
R3 125
The EUR/JPY pair is trading with a bearish bias at 125.35 level, having violated the support become a resistance level of 124.460 level. On the lower side, the EUR/JPY may gain support at 123.735 levels as worked as a support in the past. Checkout a trading plan below…
Entry Price – Buy 124.19
Stop Loss – 124.59
Take Profit – 123.79
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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