EUR/JPY intermarket: S&P 500 correcting, aiding the cross's comeback
Currently, EUR/JPY is trading at 120.13, down -0.07% on the day, having posted a daily high at 120.35 and low at 119.55.
EUR/JPY is consolidate don the 0.86 handle with supply hitting the opening bid this week and capping the cross at 0.8673 highs. The cross has since dropped back to test the 0.8620 support before demand took the cross back to test last week's closing sessions highs at 0.8660.
It is a big week for the euro with plenty of ECB speeches and the UK triggering Article 50. We have ECB's Praet and Weidmann
currently hitting the wires currently:
- A very substantial degree of monetary accommodation is still needed - ECB's Praet
- Inflation rates are relatively high - ECB's Weidmann
In respect of the yen, risk-off markets at the start of the week saw investors take cover in the yen and USD/JPY dropped to 110.10 and consolidated there until demand came in for the dollar again, albeit limited by comparison to the dollar's correction this month so far. Markets remain concerned about the GOP's ability to agree on Trump's policies. A key driver for this cross will be the performance in US stocks on the back of the Healthcare bill's failings on Friday. The S&P is correcting today to 2343 so far, reversing the bearish opening gap and recent downside to 2320 support, a positive for the cross.
EUR/JPY levels
Analysts at Commerzbank's outlook for EUR/JPY in the near term is negative: "EUR/JPY has reached the 5-month uptrend at 119.50 and this guards the 118.25 24th February low and the 116.92 2016 to 2017 uptrend. Intraday rallies are indicated to fail circa 120.40.
Longer term outlook is neutral to positive: Above the 4-month downtrend lies another downtrend at 123.88 and the 124.08 December high. Where are we wrong near term? Above the 4 month resistance line at 122.72. Initial resistance lies at 121.84, the 21st March high."