EUR/JPY holds up EUR/USD as risk flows support the yen

• EUR/JPY unable to capitalise on a weaker dollar with yen picking up the safe haven bid.
• EUR/JPY has eroded the 4 month support line.

Political risks are hindering the dollar's advance, but that is also creating flows into the yen, which is weighing on EUR/JPY's ability to really take off, despite the DXY, (mostly weighted to EUR), dropping to fresh lows in the lower end of the 96 handle. EUR/JPY has been sent down to test a critical level of trend line support on the daily time frames while EUR/USD manages to spike up to the 100-D SMA, capping the advance for the meantime. 

Meanwhile, risks are political given the US Justice Department's allegations against two Chinese nationals which is a spanner in the works with respect Sino/US trade relations. There is also concern over US government funding, with about 25% of the federal government running out of funding midnight Friday.

"The Senate passed a bill extending funding to 8 February, after which many senators left Washington, DC. But House Speaker Ryan met with President Trump and then announced that Trump said he would not sign the bill if the House passed it because it lacked $5bn for a border wall,"

analysts at Westpac explained. 

EUR/JPY levels

Analysts at Commerzbank explained that EUR/JPY remains under pressure:

"It has eroded the 4 month support line. This guards the October trough at 126.64" The analysts also said that on a move back above 127.63, the longer term scope would remain with the topside (this is less favoured). "While above 127.63, the initial target is the 200 day ma at 129.64, but to reassert upside pressure the market will need to overcome the 130.15 7th November high. This will target 131.98 17th July high, then the 133.12/13 highs from September."