EUR/JPY remains below resistance / the July low at 120.06

• EUR/JPY travelled higher as risk appetite improved a touch.
• EUR/USD rose from 1.1000 to 1.1075 while USD/JPY bopped about in the low 108s.

EUR/JPY travelled higher as risk appetite improved a touch and the Dollar sank, supporting the euro while the Yen also suffered supply. EUR/JPY is currently trading at 119.68 and is flat on the day having climbed from a low of 118.69. 

Overnight, EUR/USD rose from 1.1000 to 1.1075 while USD/JPY bopped about in the low 108s, having touched 108.37 in Asian trade, a fresh high since the 1 August Trump-China tariff tweet. As for data, the ZEW survey of Germany investor sentiment remained deeply negative in September, deteriorating further than forecast to -19.9, a low since May 2010, but the expectations index improved sharply, to -22.5 from -44.1.

Risk sentiment was on the edge but improved to a degree

Meanwhile, risk sentiment was on a the edge but improved to a degree, helping to support the cross. In Europe, the DAX fell just 0.1% but WTI eased to USD59.2bbl and later in the day, with respect to the Saudi risk, crude markets fell sharply as the Saudi energy minister was quoted as saying that “oil supply is fully back online”. 

Looking ahead, we have the Federal Open Market Committee meeting, although markets are fully priced for the decision where the Fed is expected to cut its Federal Funds rate 25bp to 1.75-2.0%.

"Along with the usual statement, this meeting will provide quarterly forecasts of GDP, inflation, the unemployment rate and the “dots” of FOMC members’ projection of the funds rate as at end-2019, 2020, 2021 and “longer term.” We will also hear from Fed chair Powell in his press conference,"

analysts at Westpac explained. 

EUR/JPY levels

Analysts at Commerzbank note that EUR/JPY is expected to short-term consolidate further below the July low at 120.06:

"Above it resistance can be seen between the June lows at 120.79/96 as well as at the 121.38 late July high. Minor support comes in at the 118.60 September 5 high. Support below the 117.55/52 August 12 and September 12 lows can be seen at the 116.58/115.87 recent lows."