- EUR/JPY rose to 131.04 in Asia – the highest level since Aug. 1.
- The EUR strength is likely associated with Draghi’s comments on inflation.
- The anti-risk JPY could continue to slide on prospects of US-China trade talks.
Currently, the EUR/JPY is trading at 130.83, having clocked a six-week high of 131.04 earlier today.
The common currency picked up a strong bid in the early US session yesterday after ECB’s Draghi expressed confidence that inflation could pick up towards the end of the year and rise gradually in the medium term, courtesy of rising domestic cost pressures.
Meanwhile, the renewed hopes of US-China trade talks and Turkey’s massive rate hike pushed up global equities and weakened the demand for the anti-risk JPY, the net result being a significant rally in the EUR/JPY.
Looking forward, corrective pullbacks, if any, will likely be short-lived as the bull flag breakout witnessed earlier this week has turned the tide in favor of the bulls. More importantly, the JPY could continue to take a beating if the risk assets continue to cheer the easing in US-China trade tensions.
EUR/JPY Technical Levels
Resistance: 131.10 (200-day moving average), 131.38 (May 14 high), 131.99 (July 17 high)
Support: 130.35 (daily pivot), 130.00 (psychological level), 129.78 (upward sloping 50-hour moving average)
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