During the Wednesday’s Asian trading hours, the EUR/JPY currency pair extended its Asian session winning streak and remain bullish around above 124.50 level mainly due to a fresh and robust rebound in the equity markets, which undermined the Japanese yen’s safe-haven demand and turned out to be the key factor that extending some support to the USD/JPY currency pair. However, market traders digested the US President Donald Trump’s decision to cancel talks with Democrats on the stimulus package. This was witnessed after the steep fall in the US equity markets turned out to be short-lived.
On the contrary, the dismal German industrial figures and coronavirus woes in Europe ten undermine the shard currency and become the key factor that kept the lid on any additional gains in the currency pair. As of writing, the EUR/JPY currency pair is currently trading at 124.64 and consolidating in the range between 123.86 – 124.72.
As we already mentioned, the Industrial Production in Germany unexpectedly dropped in August, as per the official data showed on the day, suggesting that the manufacturing sector’s recovery is losing momentum. Apart from this, the bearish sentiment around the shared currency was further bolstered by the World Health Organization’s (WHO) Regional European Director Hans Kluge warnings that Europeans suffer “pandemic fatigue” from the disruption caused by the rapid spread of the coronavirus. Thus, it was seen as one of the key factors that capped further currency pair gains.
On the contrary, the positive mood around the equity markets, triggered by a strong pickup in the US Treasury bond yields, tends to undermine the Japanese yen’s safe-haven demand and becomes one of the key factors that kept the currency pair intra-day high. It is worth recalling that the US President Donald Trump’s yesterday’s decision to cancel negotiations with Democrats over the stimulus package raised doubts about the US economic recovery. This, in turn, led to a large fall in the US equity markets on Tuesday, but the reaction turned out to be short-lived.
Looking forward, the market traders keeping their eyes on the Fed Chair Jerome Powell’s scheduled speech. In the meantime, the updates surrounding the fresh Sino-US tussle, as well as the coronavirus (COVID-19), could not lose their importance.
Daily Support and Resistance
Pivot Point 123.43
The EUR/JPY pair is trading with a bullish bias at 124 level as the single currency Euro gained bullish momentum. Simultaneously, the Japanese yen is getting weaker, just like gold amid weakness in the safe-haven appeal. We opened a buying trade over 124.175 level as it was extended by an upward channel on the 2-hour timeframe. Since we are already out, encashing 36 green pips, I would like to take a second trade, perhaps, a selling one below the 125.300 resistance level now. Let’s brace for it!