EUR/JPY: Fades a spike to 121.20, negative equities weigh

The recovery in the EUR/JPY cross lost legs near 121.20 region, sending the prices back near 121 handle as risk-off moods intensified as the Japanese stocks fell further into losses.

EUR/JPY supported at 120.80

The EUR/JPY pair drops -0.12% to 121.05, hovering around 121 handle since the last hour. The cross extends weakness for the second straight session, largely backed by a rising VIX that suggests deterioration of risk conditions, as sell-off in the global equities and commodities’ prices weighed heavily on the investors’ sentiments.

While a sudden rebound seen in the US dollar across the board, dragged EUR/USD lower and therefore, capped the recovery in EUR/JPY. Meanwhile, markets now await the German CPI data and US consumer sentiment data due for release this Friday ahead of the Chinese data dump likely to be reported on Sunday. While next week’s central banks’ gatherings remain the main focus going forward.

EUR/JPY Levels to consider  

The pair has an immediate resistance at 121.61/75 (5 & 10-DMA) and from there to 122 (round number/ 10-DMA). On the flip side, support is seen at 120.33 (Multi-year low) below which it could extend losses to towards 120.00.