- EUR/JPY extends the drop to the mid-126.00s on Monday.
- The dollar remains bid on the back of higher yields.
- ECB’s C.Lagarde comes up next in the docket.
The softer tone in the European currency weighs on EUR/JPY and drags the cross to fresh lows in the mid-126.00s.
EUR/JPY weaker on EUR-selling
The renewed buying interest in the greenback keeps the risk complex under downside pressure so far at the beginning of the week, motivating EUR/JPY to recede for the second session in a row although some decent support emerged near 126.50 so far.
In fact, investors’ repricing of the next move on interest rates by the Federal Reserve has been lending unexpected and moderate support to the dollar and pushed US yields to multi-month peaks beyond 1.10%, all in detriment of the riskier assets.
In the euro docket, investor confidence measured by the Sentix Index improved to 1.3 for the current month, while Industrial Production in Spain contracted 3.8% on a year to November.
Later in the European afternoon, Chief Christine Lagarde will participate in a panel discussion at the One Planet Summit in Paris.
EUR/JPY relevant levels
At the moment the cross is losing 0.23% at 126.75 and a drop below 126.47 (21-day SMA) would aim for 125.70 (low Dec.16 2020) and finally 124.91 (55-day SMA). On the flip side, the next hurdle is located at 127.49 (2021 high Jan.7) followed by 130.18 (monthly high Nov.7 2018) and then 133.13 (monthly high Sep.21 2018).
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