EUR/JPY helps EUR/USD bulls up to key resistance, 129 the figure at risk on Wall Street's minor bull correction

• EUR/JPY supporting EUR/USD from break below key 1.1530 level.
• Stocks down on Friday's close but finding a footing on the day and off the lows (DJIA futures were heavily offered but back to 50% of European sell-off).
• NAFTA weighing on risk sentiment but rebound in stocks motivating EUR/JPY bulls, so far. 

EUR/JPY has found a bid as US stocks find a footing, albeit on thin ice, with the DJIA futures basing at 25910 and futures rallying back to the middle of the day's range where a sell-off ensued in European markets from 26,057. As for the index, it opened at around 25,916 and has rallied on the day to 25,923, but still down 0.22%, (or some 110 points), vs Friday's business (Labour day Monday (was closed)). However, bulls are not out of the woods yet and US stocks remain fragile on trade war angst. Currently, EUR/JPY is trading at 128.98 having made a high of 129.15 and from a low of 128.31. 

The low came on the back of a sell-off in EUR/USD and the DXY rallying to the key 95.70 breakout level and with the impressive US data beat in ISM manufacturing that sent the dollar to its highs. While that is good news for the US economy and cements the case for two more Fed hikes this year - stocks have not been showing too much sensitivity to rate hike prospects and have been riding the positives on good news from the economy instead - so far.

Investors nervous over trade tensions

The downside in stocks is more motivated by trade war angst with China and more in the fore right are the uncertainties around NAFTA. Trump sent a formal notice to Congress stating that he still intends to sign a revised version of Nafta by late November but over the weekend he was urging lawmakers not to prevent a bilateral deal between Mexico and the U.S. from moving forward without Canada. 

EUR/JPY is correlated to Wall Street and global stocks in general. It is also playing a supportive role for EUR/USD bulls on Tuesday, where it helped to drive EUR/USd from the key 1.1530 support back to the hourly 21- SMA which is a key resistance level at 1.1580, (so far holding big bids in EUR/USD off).  

EUR/JPY levels

Analysts at Commerzbank explained that the Elliott wave counts suggest that dips should now hold at circa 128.40-127.90: "Below 127.90 would leave the market back on the defensive and suggest losses back to the 124.91 mid August low. Where are we wrong? Only if support at 124.91/62 were to give way, would the area between the December 2016 high and the June 2017 low at 124.09/122.40 be back on the plate."