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  • EUR/JPY adds to recent gains in the vicinity of 130.00.
  • Higher yields sustain the selling bias in the Japanese yen.
  • US advanced Q4 GDP came in at 4.1%.

The improved mood in the risk complex lends extra wings to EUR/JPY and pushes it to levels just shy of the key barrier at 130.00 the figure.

EUR/JPY in 2021 highs near 130.00

EUR/JPY advances for the third session in a row bolstered by the selling mood in both the greenback and the Japanese yen in the second half of the week.

In fact, the strong rebound in US 10-year yields to levels last seen a year ago well above 1.40% motivates sellers to remain in control of the mood around the Japanese safe haven, while the greenback sees its downside exacerbated to multi-week lows when tracked by the US Dollar Index (DXY) amidst the vigorous resumption of the reflation trade.

The weakness in the dollar has gathered extra steam as of late in response to the dovish message from Chairman Powell at both his speeches in Capitol Hill earlier in the week.

Data wise, GfK’s Consumer Climate in Germany improved to -12.9 for the month of February, while results from the US calendar showed the US GDP is expected to have expanded 4.1% QoQ in Q4 and Initial Claims rose by a weekly 730K. In Japan, both the Coincident Indicator and the Leading Index surprised to the upside in January, contracting 0.7% and 0.8%, respectively, on a monthly basis.

EUR/JPY relevant levels

At the moment the cross is gaining 0.78% at 129.76 and faces the next resistance at 129.87 (2021 high Feb.24) followed by 130.00 (psychological level) and then 130.14 (monthly high Nov.7 2018). On the other hand, a drop below 127.30 (weekly high Feb.17) would aim for 126.10 (monthly low Feb.4) and finally 125.08 (2021 low Jan.18).

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