In a quiet day, the EUR/JPY fades a recovery from an intraday low.
As Europe’s economic optimism clashes with the coronavirus’s difficulties, market sentiment dwindles.
Japan has declared a covid emergency in Tokyo, allowing for the issuance of vaccine passports.
Inflation data from Germany, as well as virus updates, are essential to watch for a new jolt of energy.
During the first hour of Tokyo trading on Tuesday, the EUR/JPY is trading below 131.00, down 0.05 percent at 130.85. The pair had risen in the last two days before falling off of the weekly high. The cause could be linked back to concerns about the coronavirus (COVID-19) and a lack of major instructions in Asia.
Despite the Japanese government’s willingness to provide free vaccine passports and a “no-spectator Olympics,” the Asian giant’s covid troubles are cause for concern. The same forces are pushing policymakers to extend Tokyo’s virus-induced emergency, while prefectural governors demand additional vaccinations and criticize the city’s hosting of a sports carnival in the midst of the pandemic.
In other nations, Australia has had the highest number of cases since September, while Malaysia, Indonesia, and Thailand have been among the hardest struck by the deadly virus recently.
On the other hand, the Euro’s (EUR) relative strength, bolstered by the ECB’s hawkish stance and positive fundamentals, favors EUR/JPY buyers. “People should be prepared for the next ECB meeting to provide additional guidance on the route forward for policy over the coming year,” ECB President Christine Lagarde said on Monday.
In the midst of these moves, the S&P 500 Futures are hovering around a record high, while Japan’s Nikkei 225 is up 0.65% as of press time.
Moving on, the ECB’s tapering concerns will be reflected in Germany’s headline inflation report for June, the Harmonized Index of Consumer Prices, which is expected to confirm 2.1 percent YoY preliminary predictions. The covid updates, on the other hand, are critical for near-term direction. Above all, the Bank of Japan’s (BOJ) monetary policy meeting this week keeps USD/JPY traders on the edge of their seats.
Read: BOJ Predictions: The Yen Has Room to Fall (Temporarily) Due to a Downgraded Outlook and Concerning Virus Situation
Despite rising from late April lows in the last week, EUR/JPY bulls will need to break through the monthly resistance line near 131.60 by crossing the 100-day moving average of 131.15. In the meanwhile, a daily close below the 130.00 level will reawaken the bears./n
