EUR/JPY pushing against 123.45/50 support level
- EUR/JPY capped below 123.90, extends losses to 123.45/50 area.
- The euro has lost more than 1% against the yen in a three-day downtrend.
- FX analysts at Credit Suisse see the pair trading lower, aiming for 123.28.
The euro recovery attempt witnessed during the early Asian session today has been capped a handful of pips shy of 124.00, and the EUR/JPY pair has resumed its downtrend. The common currency has depreciated more than 1% so far this week on a three-day decline, with the Japanese yen favoured by the overall risk-off mood.
Risk aversion hurts the euro
The common currency peaked at 125.10 versus the yen last week to end a two-week upside trend. Investor's concerns about the spread of coronavirus infections in the main European countries and the uncertainty regarding Brexit negotiations with the UK plus a set of downbeat EU macroeconomic indicators have crushed the mild optimism experienced last week, undermining confidence on the euro.
Today the US Treasury Secretary, Steven Mnuchin has curbed market optimism further, downgrading the expectations of any US stimulus agreement before the presidential elections. This has pushed equity market further into negative territory, adding selling pressure to the euro, in favour of safer currencies like the USD or the JPY.
EUR/JPY: immediate risk remains lower with support at 123.28 – Credit Suisse
FX analysts at Credit Suisse warn about a downside acceleration towards 122.38 or lower: “Support is seen next at 123.28/24 ahead of the early October spike low at 123.03, which we look to try and hold to define the lower end of a near - term range. A breakthrough would warn of a move back to retest the 122.38 late September low, with key retracement supports seen at 122.27/23 – including the 38.2% retracement of the entire rally from the May low – which we continue to look to remain a stronger floor.”
Key levels to watch