EUR/JPY regains 139.00 on upbeat German data, ECB forecasts, yields eyed

• EUR/JPY bounces off three-week low on firmer German data, rebound in yields.
• German Factory Orders unexpectedly improved in May, yields recovery from five-week low.
• 50-DMA challenges sellers but bearish oscillators, break of key support hints at further downside.

EUR/JPY picks up bids to regain 139.00 after German Factory Orders recalled the pair buyers during the initial hours of the European session on Wednesday.

That said, Germany’s Factory Orders for May improved to -3.1% YoY versus -6.2% prior. The monthly print also crosses -0.6% forecast to 0.1%.

Also keeping the EUR/JPY buyers hopeful is the recent rebound in the US Treasury yields. The benchmark US 10-year Treasury yields slumped to the lowest levels in three weeks the previous day before bouncing off 2.80%, up two basis points near 2.82% by the press time.

The recovery in yields could be linked to the market’s consolidation ahead of the key European Central Bank (ECB) Economic Forecasts and the Federal Open Market Committee (FOMC) Minutes, not to forget the US ISM Services PMI for June, expected 54.5 versus 55.9 prior.

It’s worth noting, however, that the recently flashed all-time high inflation data of the Eurozone joins economic fears due to the energy crisis in the bloc to push the ECB towards worrisome predictions, which in turn could weigh on the EUR/JPY prices. It should be noted that the fears of the ECB’s crisis-fighting scheme risks being tied up in legal and political knots, per the Financial Times (FT) also weigh on the EUR/JPY prices.

Technical analysis

EUR/JPY jostles with the 50-DMA level surrounding 139.00 as reverses from the lowest levels since mid-June.

Even so, bearish MACD signals and downbeat RSI joins the pair’s sustained break of an upward sloping trend line from April, near 139.40 by the press time, to keep sellers hopeful.

That said, the pair’s further downside needs validation from 139.00 to visit multiple tops marked during late May around 137.40-30. Following that, May’s low of 132.66 will be in focus.

On the contrary, recovery beyond 139.40 could aim for the 21-DMA level of 141.76. However, the weekly descending trend line and monthly horizontal hurdle, respectively near, 142.00 and 144.25-30, will be crucial resistances for the EUR/JPY pair traders to watch past 21-DMA breakout.

EUR/JPY: Daily chart

Trend: Further weakness expected