- EUR/JPY drops to the 121.60 area, where decent support emerges.
- The persistent risk aversion, dovish ECB weigh on the cross.
- EMU, German flash Q3 GDP figures surprised to the upside.
The dominating risk aversion sentiment in the global markets keep fueling the downside momentum in EUR/JPY, this time to new 3-month lows in the 121.60 area, although it later managed to regain some composure and return to the positive territory.
EUR/JPY bearish on pandemic fears
EUR/JPY manages to leave behind the initial pessimism that forced the cross to drop for the fifth consecutive session and break below the key contention area around 122.30, or September lows, and re-test levels last seen in mid-July.
Indeed, raising fears of the impact of the fast-spreading coronavirus pandemic on the global economy continue to add support to the demand for the safe haven universe, clearly giving extra wings to both the dollar and the yen.
Data wise in the euro area, preliminary GDP figures showed the economy is expected to rebound sharply by 12.7% in the July-September period, while the unemployment rate stayed put at 8.3% during last month. In the same line, the German economy is also expected to expand more than 8% during the same period, although Retail Sales contracted at a monthly 2.2% in September.
EUR/JPY relevant levels
At the moment the cross is gaining 0.01% at 122.06 and faces the next hurdle at 123.56 (100-day SMA) followed by 124.40 (55-day SMA) and then 125.08 (monthly high Oct.9). On the downside, a drop below 121.61 (monthly low Oct.30) would aim for 121.13 (200-day SMA) and finally 119.31 (monthly low Jun.22).