EUR/JPY meets support near 123.60 after data

EUR/JPY drops and rebounds from the 123.60 region.
The better mood in the dollar weighs on the cross on Wednesday.
US ADP, GDP surprised to the upside in the calendar.

Pablo Piovano FXStreet

The resumption of the risk aversion is lending support to the demand for the greenback and weighs on EUR/JPY, which has so far met contention in the 123.60 area on Wednesday.

EUR/JPY is now focused on upcoming data

EUR/JPY is fading part of the recent 2-day advance to the 124.20 region, area coincident with a resistance line off the June 22 low at 119.31.

The improved sentiment around the buck comes in tandem with the resumption of the risk-off trade among investors on the back of the unremitting advance of the second wave of the COVID-19 pandemic.

In addition, the recent presidential debate between President Donald Trump and his Democrat adversary Joe Biden seems to have casted more questions than answers and it appears to have been also collaborating with the demand for the dollar.

Earlier in the session, ECB’s Christine Lagarde once again showed concerns over the low inflation levels in the region, while Board member Madis Müller talked down the level of the exchange rate.

In the docket, German Retail Sales and the labour market surprised to the upside, while Italian consumer prices are expected to contract more than expected in September.

In the US, the ADP employment report came in at 749K in for the month of September and the final print of the Q2 GDP showed the economy contracted slightly less than forecasted. Additional data include Pending Home Sales, the Chicago PMI and the EIA’s report on crude oil stockpiles.

EUR/JPY relevant levels

At the moment the cross is losing 0.18% at 123.79 and a move below 122.37 (monthly low Sep.28) would open the door to 120.91 (200-day SMA) and finally 119.31 (monthly low Jun.22). On the flip side, the next up barrier is located at 124.60 (55-day SMA) followed by 126.46 (weekly high Sep.10) and then 127.07 (2020 high Sep.1).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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