EUR/JPY looks for clear direction to stay positive beyond 120.00

• EUR/JPY carries the bounce off November 2019 lows.
• Risk reset needs support as Chinese headlines started to reprint downbeat coronavirus updates.
• Data from Japan and Germany, coupled with political/virus-related news, will be followed for fresh impulse.

EUR/JPY remains mildly bid around 120.30 during early Wednesday. While receding fears of China’s coronavirus helped the pair to take a U-turn from multi-week low the previous day, recent headlines haven’t been positive to stretch the recovery.

While Chinese authorities and experts try to placate fears concerning the outbreak of coronavirus, increasing death toll, to 132 latest, as well as a hike in confirmed cases to 9,239, challenges the optimism.

Following the steady rise in coronavirus fatality, the US seems to ground planes to and from China whereas senior fellows from the Yale University warns on the potential for the coronavirus outbreak to shock the world in a recession.

Even so, the US 10-year treasury yields extend the previous run-up to 1.667% whereas S&P 500 Futures also rise by 0.30% to 3,290.

On the data/event front, the latest Summary of Opinions from the Bank of Japan (BOJ) keeps the bearish bias while highlighting the need for fiscal support to remain prudent.

Traders will now keep eyes on Japan’s January month Consumer Confidence Index and Germany’s GfK Consumer Confidence Survey data for February for fresh impulse. While Japanese data is likely to have improved from 39.1 to 40.8, German sentiment gauge is expected to remain unchanged at 9.6. Also should be on the investors’ radar will be political plays in Italy and headlines from China.

Technical Analysis

100-day SMA, at 120.40, caps the pair’s immediate upside while sellers’ entry below the recent low near 119.80 could recall November 2019 bottom surrounding 119.25.