EUR/JPY: Sellers look for 124.30/20 as risk off dominates market sentiment
- The EUR/JPY pair struggle around 124.70 during early Asian trading on Monday.
- The pair continues to remain under 50-day SMA as uncertainty surrounding Brexit and weak China data challenge market optimism.
- Upcoming second-tier data from Japan and Germany can be observed for fresh impulse.
EUR/JPY trades near 124.70 during early Monday. The quote remains weak as uncertainty concerning Brexit and soft inflation numbers from China continues favoring risk-off sentiment. Traders may now await German industrial production and trade balance details for fresh impulse while developments surrounding Brexit could keep offering background music to the momentum.
The EUR/JPY pair has been on a decline since early last-week as disappointments from major economies like the US and China join hands with the UK PM Theresa May’s inability to please EU leaders over Brexit deal.
During the weekend, several EU Brexit proposals were rejected by the British leaders whereas China’s producer prices index (PPI) remained only a bit up from signaling deflation on a yearly basis.
At the present week start, risk sentiment was further alleviated as the UK Telegraph reported that the EU could demand a multi-billion Pound increase in divorcee payment if the British parliament delays Brexit from present March 29 deadline.
While Japan’s preliminary machine tool orders YoY for February can offer intermediate moves to the EUR/JPY pair, January month seasonally adjusted German trade balance and industrial production can become important to watch then after.
Japan’s preliminary machine tool orders dropped 18.8% in January. German industrial production could reverse earlier contraction of -0.4% with +0.4% whereas trade balance might also rise to 21.00 billion Euros from 19.4 billion.
EUR/JPY Technical Analysis
In addition to the EUR/JPY sustained trading beneath 50-day simple moving average of 125.00, its break under short-term ascending trend-channel also signal weakness to test 124.30-20 support-zone comprising lows of last-week and mid-February.
On the upside clearance of 125.00, the pair can aim for 125.40 and 126.00 resistances.