EUR/JPY: Risk-off returns to market after RBA Lowe’s and Trump’s SOTU speeches
- The EUR/JPY pair extended its declines to 125.00 during early Wednesday.
- Renewed risk off sentiments based on comments from the RBA Governor and the US President triggered across the board JPY strength.
- EUR/JPY rests on 125.00 support-line on the failure to extend recovery beyond 125.90 resistance.
The Japanese Yen stretched its overnight gains against the Euro towards testing the 125.00 on early Wednesday. The EUR/JPY pair remained on the down foot as comments from the Reserve Bank of Australia (RBA) Governor Phillip Lowe and State of the Union (SOTU) speech by the US President Donald Trump renewed risk sentiments.
Lowe turned the table against the Aussie as he mentioned an increase in downside risks to the economy during the speech at the National Press Club, Sydney. The RBA Governor also emphasized on equal probabilities of next rate moves and crossed the central bank’s optimistic view released on Tuesday.
On the other hand, Donald Trump aptly used SOTU appearance to convey his will to build Mexican border. Trump also pushed China towards more serious deliberations before the US treasury secretary Steven Mnuchin and the trade representative Robert Lighthizer reach Beijing to discuss the trade deal next week.
While Lowe’s passive remarks reignited fears of monetary policy uncertainty, Trump’s speech was more of a threat to the US politics and trade relations with China. As a result, global investors turned back towards traditional risk-safeties, like the JPY, which in-turn pressed the EUR/JPY pair downwards.
EUR/JPY Technical Analysis
The absence of a decisive break above 125.90 again highlights the importance of near-term supportline, at 125.00 now. Should the pair drop beneath 125.00, the 124.40 and the 123.70 are likely following numbers to appear on the chart.
Meanwhile, an upside clearance of 125.90 may trigger the pair’s recovery to 126.70 and then to the 127.00 resistance levels. Also, pair’s sustained trading above 127.00 enables it to aim for the 127.60 and the 128.20 levels to the north.