EUR/JPY drops to 5-month low on risk aversion

EUR/JPY dropped to 116.00, the lowest level since November 14 before recovering slightly to trade largely unchanged on the day around 116.20 levels.

Risk-off supports Yen rally

Asian stock markets are on the back foot this Wednesday morning on heightened geopolitical risks. US President Trump tweeted yesterday that China’s help in taming North Korea would be welcome, but if China does not help the US would handle the situation alone.

The Shanghai Composite is down 0.17%, while Nikkei is down 1.2%. Australian shares are trading flat lined. Meanwhile, China PPI offered little help to lift the risk sentiment. The Eurozone data calendar is light; hence the focus remains on the overall market sentiment.

EUR/JPY Technical Levels

A breakdown of support at 116.00 (zero figure) would expose support at 115.68 (Nov 1 high). The daily RSI is oversold, hence further losses would require a daily close below 115.68, in which case the next support at 115.00 could be put to test. On the other hand, a break above 116.58 (Nov 10 high) would add credence to the oversold RSI and open doors for 117.00 (zero figure) and 117.08 (5-DMA) levels.