- The EUR / JPY reversal from its high of 116.85 extends to its two-day lows at 115.75.
- The euro is losing ground while the yen is strengthening while market sentiment is deteriorating.
- Below 115.85, the pair could lose some upside momentum – Credit Suisse.
The euro is losing strength against the Japanese yen, the pair’s reversal from Tuesday’s high of 116.85 extending below the immediate support area at 115.93 / 95. The pair fell to a two-day low at 115.70, the yen outperforming its peers in a risk-averse market.
Euro recovery weakens as market sentiment dulls
EUR / JPY rally of 114.37 lower last week was found resistance Monday just before 117.00, and the pair retreated, to accelerate its reversal on Wednesday. Moderate optimism over plans to ease pandemic restrictions has been Fed Powell comments, warning of the possibility of a long-term slowdown of the coronavirus in the United States.
The prevailing feeling of risk aversion weighs on the euro in favor of safe havens such as the yen or the American dollar. In this context, the euro has lost about 0.5% in the past two days, following a 1.6% rally in the previous three days.
EUR / JPY: Break below 115.84 to ease bullish bias – Credit Suisse
The FX analysis The Credit Suisse team sees the rebound from 114.37 as a corrective reaction and focuses on the support level 115.84 / 82: “We see the possibility of a price resistance test at 116.57 / 61 but we are looking for that to then try to cap for an attempt to fall again (…) The support is seen at 115.84 / 82 initially, below what can mitigate the immediate upside bias, but with a movement below 115.08 / 03 needed to suggest that the downward trend has resumed for a fall to 114.38. “