EUR/JPY collapses below 126.00, fresh lows

• The cross breaks below 126.00 to record fresh multi-month lows.
• Selling pressure around the single currency picks extra pace.
• Rising uncertainty in Italian politics continue to weigh on EUR.

The offered tone around the European currency remains intact so far this week and is now dragging EUR/JPY to test fresh lows in sub-126.00 levels.

EUR/JPY in new multi-month lows

The cross is now accelerating the downside, breaching the key support at 126.00 the figure and testing lows in the 125.80 region, levels last traded almost a year ago and always against the backdrop of a much weaker EUR.

In fact, political uncertainty in Italy plus the continuation of the unwinding of extreme EUR long positions keep the pair under heavy pressure today, which is down for the sixth session in a row for the time being.

In addition, declining US 10-year yields are impacting on USD/JPY, dragging it to fresh lows and in turn lending extra legs to the Japanese safe haven currency, all collaborating with the decline in EUR/JPY.

In the data space, ECB’s M3 Money Supply expanded at an annualized 3.9% in April, while Private Sector Loans rose 2.9% on a yearly basis in April. Later in Euroland, ECB’s Y.Mersch and S.Lautenchaelager are due to speak.

EUR/JPY relevant levels

At the moment the cross is losing 1.18% at 125.69 facing the next support at 125.00 (psychological level) seconded by 122.56 (low May 18 2017) and then 122.40 (low Jun.15 2017). On the upside, a breakout of 128.54 (high May 28) would open the door to 129.01 (10-day sma) and finally 129.84 (21-day sma).