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  • EUR/JPY adds to recent gains above 129.00 on Thursday.
  • The selling mood in the Japanese yen sustains the cross.
  • US Initial Claims, Powell next of relevance in the docket.

The continuation of the selling bias in the Japanese yen lends extra legs to the EUR/JPY beyond 129.00 the figure in the second half of the week.

EUR/JPY focused on risk trends, data

Investors’ concerns over potential inflation in the next months, exclusively stemming from the planned increase in US fiscal stimulus, continue to lend support to the dollar and therefore hurt the sentiment surrounding the risk universe and sponsor further outflows from the Japanese yen.

Indeed, yields of the US 10-year benchmark managed to regain the 1.50% level and above in past sessions, area last visited more than a year ago.

In the meantime, the reflation/vaccine trade now seems to be an extra factor sustaining the recovery in the buck in detriment of the demand for riskier assets.

In the US docket, Initial Claims rose by 745K WoW during last week, bettering expectations. Additionally, Unit Labor Costs rose 6.0% inter-quarter in Q4, and Nonfarm Productivity shrunk 4.2% QoQ during the same period. Earlier, Challenger Job Cuts dropped to 34.531K during last month (from 79.552K).

EUR/JPY relevant levels

At the moment the cross is gaining 0.16% at 129.30 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 128.18 (weekly/monthly high Mar.2) would aim for 127.30 (low Feb.17) and finally 126.95 (50-day SMA).