- EUR/JPY corrects lower from YTD peaks near 128.50.
- The buying pressure in the dollar weighs on the cross.
- US Retail Sales expanded at a monthly 5.3% in January.
After reaching fresh 2021 highs in the mid-128.00s during early trade, EUR/JPY reverses those gains and recedes to the 128.00 area and below.
EUR/JPY weaker on risk-off trade
EUR/JPY is correcting lower for the first time after six consecutive daily advances, coming under some selling pressure soon after hitting the 128.50 region earlier on Wednesday, area last seen in December 2018.
The strong rebound in US yields encourages the US dollar to leave behind the recent weakness and refocus on the upside, pushing the US Dollar Index (DXY) to multi-day peaks near the 91.00 yardstick and forcing the risk complex to shed further ground.
In the docket, Japan’s Adjusted Trade Balance figures showed the trade surplus shrunk to ¥0.39 trillion in January. In the US data space, headline Retail Sales surprised to the upside in January and expanded at a monthly 5.3%, while Core Sales also rose above estimates 5.9% MoM. Later in the US docket, the Industrial Production figures are due seconded by the FOMC Minutes.
EUR/JPY relevant levels
At the moment the cross is losing 0.37% at 127.88 and a drop below 127.49 (monthly high Jan.7) would aim for 126.10 (monthly low Feb.4) and finally 125.08 (2021 low Jan.18). On the other hand, the next up barrier emerges at 128.45 (2021 high Feb.17) followed by 129.25 (monthly high Dec.13 2018 and then 130.14 (monthly high Nov.7 2018).
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