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  • Euro soars versus yen boosted by the rally in EUR/USD above 1.2000.
  • Yen drops across the board hit by risk appetite.

The EUR/JPY broke a key resistance area around 125.10 and jumped to 125.79, hitting the highest level since September 14. The pair climbed more than a hundred pips during the American session so far, boosted by risk appetite and by technical factors.

The rally in EUR/USD added strength to the euro. Also, the move higher in USD/JPY boosted further EUR/JPY. The yen remains under pressure as equity indexes in Wall Street reached record highs.

The combinations of risk appetite and also technical developments helped EUR/JPY break the key barrier located between 125.00 and 125.10 that capped the upside during October and November.

A daily close in EUR/JPY above 125.10 would suggest more gains ahead. The next strong resistance is seen at 126.15/20 and then then the 127.00 area. A retreat back under 125.00 would suggest the euro is not ready yet to more gains, pointing to a reversal.

Technical levels