EUR/JPY: Looks firmer on its way to 123.00 following trade-positive headlines
- EUR/JPY praises improving trade relations between the US and other major economies.
- Political pessimism concerning the Brexit, phase-two deal uncertainty and upbeat Japan data seem to restrict the bulls.
- German CPI, trade/political headlines to provide fresh impulse.
EUR/JPY keeps the bulls happy while taking the bids to 122.65 amid Thursday’s Asian session. The pair portrays the recent recovery in the market’s risk tone amid upbeat headlines from the US. Though, upbeat data from Japan, political uncertainties in the US, also regarding the Brexit, keep the prices in chains.
Japan’s December month Producer Price Index (PPI) matched 0.9% forecast on YoY while also declining below 0.2% expected to 0.1% on MoM. However, Machinery Orders grew well beyond 3.2% market consensus to 18% on a monthly basis. Further, the Machinery Orders YoY also crossed -5.4% forecast to register a 5.3% growth.
The US and Chinese trade negotiators are through the phase-one signing in ceremony and traders welcome the event. The US Vice Preside Mike Pence recently said that they have already begun discussing the phase-two deal. Also supporting the risk-on are the comments from the US Treasury secretary that the United States–Mexico–Canada Agreement (USMCA) and the US-China trade deal will add 50 to 70 basis points to US GDP.
On the other hand, comments from the German Chancellor as well as the progress of US President Donald Trump’s impeachment process seem to keep the risk on the cards. German Chancellor warned the European Union (EU) about the Brexit while the US House Speaker Nancy Pelosi and the team moved forward to present impeachment documents to the Senate.
Moving on, December month inflation data from Germany, expected 1.5% YoY, will important to watch as it holds the key to push the European Central Bank (ECB) farther from its easy money policy.
Technical Analysis
Buyers will look for entry beyond the weekly top of 122.77 to aim for 123.00 and July 2019 top surrounding 123.35, failing to do so can recall 121.50/45 area on the chart should the quote slips below 122.20 immediate support.