EUR/JPY: sideways channel to hold, 200-D SMA on the radar?

• EUR/JPY: all eyes on trade war risk, although dollar firm.
• EUR/JPY: upside targets are through the 200-D SMA.

EUR/JPY has started out the week pressured from 131.43 to a low of 131.10 while there is a focus on the performance of equity markets in consideration of trade war angst. EUR/JPY is currently trading at 131.26.

There was a wild ride in the FX space on Friday after the nonfarm payrolls miss with a lift in the unemployment rate to 4.1%. This sent the euro higher and the cross ran to a high of 131.62 resistance level before dropping back to 131.20 support and a little further on the back of Mnuchin saying there is the potential of a trade war with China, turning risk sour in the US session and off a cliff. 

Trade wars in focus

China's Xi Jinping speech to be focus during Boao Forum

However, the dollar is picking up to test the 107 handle vs the yen and a continuation there and a subsequent break of the 21-hr sma at 107.13 and 107.20 would leave the sideways channel in the cross intact with a focus back on the aforementioned resistance. For the week ahead, eyes will be with German CPI,  IMF world economic outlook and trade war sound bites from the Boao Forum where Chinese President Xi Jinping gives a keynote address. 

EUR/JPY levels

From a technical point of view, the 200-day ma at 132.13 has yet to be breached that guards 132.43/47 as the  March high and Fibonacci retracement. The February 21 highs at 133.05/09 would be the next upside target. To the downside, analysts at Commerzbank explained that below 128.96 would trigger a slide to the 127.27 August 2017 low and suggests scope for the 125.58/50% retracement of the move up from 2017.