- EUR/JPY clinched new 5-week tops in the 122.50 region.
- The better tone in the Japanese safe haven caps the upside.
- The BoJ left its monetary policy stance unchanged earlier on Wednesday.
The buying pressure in the Japanese yen has forced EUR/JPY to abandon the area of new multi-week highs near 122.50 recorded earlier in the session.
EUR/JPY shifts its focus to YTD highs
After climbing as high as the vicinity of 122.50 during early trade, EUR/JPY sparked a correction lower to the current 122.20 region amidst the persistent selling bias in the dollar (thus lending oxygen to the Japanese safe haven and dragging USD/JPY lower).
In the meantime, the risk-on sentiment remains firm in the global markets, this time fuelled by news of a probable COVID-19 vaccine (this time under development by US biotech Moderna, Inc,) and usual optimism over the global economic recovery.
Earlier on Wednesday, the Bank of Japan (BoJ) left its monetary conditions unchanged, with the key rate at -0.10% and the yield of the 10-year JGB at 0.00%, all matching consensus estimates.
At his press conference following the bank’s decision, Governor H.Kuroda, reiterated the need to rump up stimulus if needed and the appropriateness of aggressive bond purchases.
Later in the NA session, Industrial/Manufacturing Production figures are due followed by the NY Empire State index and the publication of the Fed’s Beige Book.
EUR/JPY relevant levels
At the moment the cross is advancing 0.01% at 122.25 and faces the next up barrier at 122.49 (monthly high Jul.15) followed by 122.87 (monthly high Jan.16) and finally 124.43 (2020 high Jun.5). On the other hand, a drop below 120.26 (monthly low Jul.1) would expose 119.77 (200-day SMA) and then 119.31 (monthly low Jun.22).
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