On the last trading day of the week, the EURJPY cross changes gains with losses, sitting in quite a wide range between 120.40 and 121.00. First, the pair edged lower to its 200-day ma near 120.36 then was underpinned by stronger Germany and Eurozone PMI indices but finally lost its traction.
Today, markets were spooked by the coronavirus reports from South Korea – the country confirmed 52 new cases raising the total death toll to 156. Australia reported two more cases of coronavirus (17 in total) while two passengers of the cruise ship quarantined in Japan died from the epidemic. Fears that the new pandemic may spread globally heightened, and the risk-off sentiment reemerged as a result. The safe-haven yen managed to capitalize on the environment and went up, dragging the cross to session lows in the 120.40 region.
During the European session, however, EURJPY recovered as the euro got boosted by the better-then-expected German manufacturing PMI for February. The index came in at 47.8 versus 44.8 expected, and even weaker services sector (53.3 versus 53.8 expected) failed to overshadow upbeat manufacturing figures. Meanwhile, decent Eurozone PMIs (manufacturing, services and composite indices all bettered the estimates) supported further pair’s rally to the 121.00 region.
However, the revived buying interest for the safe-have yen made EURJPY stall its rise. The cross staged a modest pullback and entered the red zone. Now, the pair is changing hands below the key 121.00 mark and continues to lose ground.
From the technical point of view, while the EURJPY pair stays above its SMA200 (today at 120.38), the constructive outlook persists. If the upward momentum gains extra pace, the cross will likely target YTD highs near the 123.00 region. The support is at 120.22, 119.50 and 118.91. Despite a solid rebound seen in the EUR, the pair may not be able to witness a sustained rally as the uncertainty about the potential negative coronavirus impact on the global economy is still high. And while it affects market mood, the strong yen will keep a lid on the pair’s further rise.