EUR/JPY retracing close to 130.00 handle ahead of Eurozone GDP on Tuesday

• Tuesday’s Eurozone Gross Domestic Product likely the next market mover for the euro.
• The US-China trade talks are set to resume this Tuesday. 

The EUR/JPY is trading at around 130.95 up 0.24% on Monday.

The EUR/JPY opened in Asia close to the 130.50 level and rose consistently until it found an intraday top at 131.39 in the American session. The currency cross is now consolidating close to the 131.00 level as stocks have seen a mild move down.

The next market-moving events for the euro are scheduled on Tuesday with the Gross Domestic Product data from the Eurozone and Germany as well as the German Zew survey. A surprise to the upside can further boost the EUR. 

EUR/JPY has mainly been taking its cues from the EUR/USD. The last three days have seen investors taking profits on the greenback as recently the Non-Farm Payroll and the US inflation came below expectations.

Meanwhile, the euro currency seems unaffected by the political situation in Italy where the Five Star Movement and the League have made a proposal for a 15% flat tax, a universal income for the poor and early retirement age. 

On the yen side of the story, the geopolitical picture seems to brighten up slightly. The yen is usually bought in times of stock market uncertainties and political turmoil. The US and China are set to resume discussions over trade wars on Tuesday. “China and the United States are working well together on trade, but past negotiations have been so one-sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries. But be cool, it will all work out!” tweeted the US President Trump last Sunday. Additionally, the progress made on ZTE, Chinese cell phone manufacturer is seen as positive.

EUR/JPY 4-hour chart 

The medium-term trend is bullish and the currency cross is pulling back. Immediate support is seen at 131.00 followed by 130.78 swing high and then 130.00 swing low. To the upside, the currency cross can face resistance at 131.39 high of the day and then at 132.00 figure. The pair is trading below its 100 and 200-period simple moving averages (SMA) on the 4-hour chart which is seen as bearish, however, it is trading above its 50-period SMA.