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  • Yen drops across the board despite lower equity prices in Wall Street.
  • EUR/JPY heads for the highest weekly since April 2019.

The EUR/JPY pair is rising for the third day in a row. On Friday it accelerated to the upside, hitting levels above 125.00 for the first time in a year. It peaked at 125.20 and then pulled back to 124.75. As of writing, it is hovering around 125.00, up a hundred pips for the day.

From a technical perspective, a key development in EUR/JPY was the breakout of the 124.20/30 resistance band. It is now about to post the highest weekly close since April of last year. It is the fifth weekly gain out of the last six weeks.  Technical readings show overbought readings suggesting some consolidation could take place before another leg higher.

From a strong euro to a weaker yen

Before Friday, the key driver in the EUR/JPY rally was a stronger euro. The common currency last week was among the top performers boosting the EUR/JPY. During the current week, the pair moved mostly sideways as the rally in EUR/JPY was offset by a declining USD/JPY. On Friday, the yen gave up, leading to hundred pip rally in USD/JPY and a decline of the yen across the board.

The Japanese currency weakened dropped even as equity prices in Wall Street turned negative. Month-end flows and higher US yield weighed on the yen, favouring the sharp rally in EUR/JPY.

Technical levels