EUR/JPY trims losses after falling to 7-week lows

A stronger yen pushed EUR/JPY to drop to the lowest level in seven weeks earlier today. During the last hours, the pair bounced sharply to the upside and trimmed losses, rising back on top of 128.00. 

EUR/JPY rebound: will it be sustainable?

Risk aversion sent USD/JPY sharply lower while EUR/USD remained unchanged. That lead to a slide of EUR/JPY to 127.54, the lowest since June 30.

Equity markets stabilized and then rebounded when speculations about Stephen Bannon’s leaving the White House started. Recently, White House Spokesperson Sanders confirmed that today’s is Bannon's last day. Markets reacted positively and the yen lost further strength. 

EUR/JPY rose more than a hundred pips and found resistance at 128.80. Currently trades at 128.40/50, flat for the day, and less than 50 pips below the level it had a week ago. 

Today’s reversal could offer signals about a change in the current short-term bearish bias. To the upside, the key level is 129.80, a horizontal resistance and also the 20-day moving average. A break higher could lead to a test of 2017 highs. 

On the opposite direction, a decline back below 128.50 would strengthen the bearish case. To the downside, the next strong barrier is seen at 125.80/90 (May highs).