EUR/JPY extends three-day losing streak to break 120.00 amid risk-off

• EUR/JPY remains pressured near the monthly low.
• Increase in coronavirus cases from China and Beijing probes the initial risk reset.
• ECB’s TLTRO sees 1.4 trillion euro loan demands, policymaker de Guindos favor grants over loans.
• Japan’s CPI weakened while BOJ minutes showed sustained support for further bond buying.

EUR/JPY dwindles around 119.80/85 during the early trading hours of Friday. The quote recently took clues from abating risk-tone sentiment to portray a four-day losing streak. Even so, Thursday’s low, also the weakest level since June 01, remains untouched as data/events from Japan weigh on the Asian currency.

Although hopes of further stimulus from the US and heavy demand of the European Central Bank’s (ECB) Targeted Long-Term Repo Operations (TLTRO) restricts the pair’s further downside, failure of the risk-takers to return on the desks exert downside pressure on the pair. The fading of the trading sentiment could be traced from the recent increase coronavirus (COVID-19) numbers from mainland China and Beijing. Also contributing to the risk-tone could be the US-China tussle over Hong Kong and Xinjiang issues, as well as the EU-UK fight over Brexit.

Against this backdrop, the US 10-year Treasury yields defy the previous day’s fall while taking rounds to 0.70% whereas Japan’s Nikkei 225 trims the early-day gains to 22,381.50, up 0.12%, by the press time.

Looking at the economic calendar, Japan’s National Consumer Price Index (CPI) for May flashed downbeat figures. Also, minutes of the latest BOJ monetary policy suggests that some policymakers discussed increasing support to combat the pandemic.

Moving on, the pair traders will have to keep eyes on the risk catalysts for fresh impulse. In doing so, virus news from China, the US and the rest of the world should be preferred for a watch. Additionally, the US-China tension and geopolitical tussle in Asia might as well offer intermediate trading opportunities.

Technical analysis

A six-week-old support line, at 119.75 now, followed by a 200-day SMA level of 119.60, restricts the pair’s immediate downside. On the contrary, last Friday’s low near 120.25 and a descending trend line from June 05, currently around 121.10, could probe the recovery moves of the pair.