EUR/JPY stalls recovery, drops back towards 130 handle

The latest North Korea nuclear tests news bolstered the demand for the Yen across the board, sending the Yen crosses sharply lower. Hence, the EUR/JPY pair eroded nearly 50-pips rapidly at open to test 130 handle.

Thereafter, the cross attempted a minor recovery and regained 130.50 levels, having consolidated around the last almost throughout the Asian trades.

Heading into Europe, the EUR/JPY pair once again witnessed fresh selling pressure and dropped back to test daily lows reached at 130.14, as markets gear up for another round of risk-aversion on the European open.  

Also, the pair awaits the Eurozone Sentix Investor Confidence data for fresh trading impetus, as the US docket remains empty, with the US markets closed on a Labour Day.

Technical Levels

“EUR/JPY we suspect the formation developing is a possible megaphone top – these are a nightmare to trade. Marginal new highs are not sustained and the market swings back into the range - attention is on the 20 day moving average, now at 128.70. Below 128.70 would target the 125.57 August low,” Karen Jones, Analyst at Commerzbank writes.