EUR/JPY: tracking improved risk appetite, 132.43 in focus

• EUR/JPY: bulls in control, eye higher grounds still.
• EUR/JPY: stages impressive rally.

EUR/JPY: tracking risk In a rebound of risk sentiment, inline data and prospects of an on-track ECB following the Easter spending price push, the EUR/JPY cross staged an impressive recovery from the 130.20's risk-off lows to score a high of 131.19 overnight ahead of the Asian handover. 

The rally occurred on some relief in North American markets from the latest attempts to cool down the tariff-tantrum between China and the US, lifting the cross to 131.15, (the euro had previously caught a bid anyhow with the dollar taking an initial hit on the Chinese tit-for-tat tariff retaliations late yesterday, buoying the EUR/JPY cross in late European trade).

Wall Street's turnaround

The cross was moving in synch with the US benchmarks that had made an impressive reversal. The DJIA, after trading over 600 points lower, rallied to end the day higher by 230 points at 24,264.30 while the Nasdaq Composite and the S&P put up over 1.0% each, to close at 7,042.11 and 2,644.69 respectively. 

For now, the trade war angst is directing price action, but it will not be long before Trump and Abe rally up the next potential storm in the FX space when matters related to the Yen exchange rate becomes the next key focus. Trump is surely going to pressure the Japanese while the nation tapers QE at the slowest pace in four years. The two leaders will meet on April 17-18th.

EUR/JPY levels

Analysts at Commerzbank noted that the pair, in the term-term at least, holds upside potential but so far has not managed to overcome the 200-day ma at 132.11. 

Key Quotes:

• "The recent low at 128.96 was accompanied by a large divergence of the daily RSI and we suspect that we have based there."
• "Resistance above the 200-day ma comes in at the 132.43/47 current March high and Fibonacci retracement. If bettered, the January low and February 21 highs at 133.05/09 would be on the cards together with the 134.25/61.8% retracement."

Forex today: risk-off/risk-on, sentiment for China and US to behave ... eventually