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  • EUR/JPY rallies nearly 2% to hit two-month highs above 117.80.
  • The pair has found resistance at 118.20 following a three-day rally.
  • Above 117.77/83, EUR/JPY might aim to 118.58/63 or higher – Credit Suisse.

 

The euro has been trading on a firm footing against the yen this week, fuelled by the positive market mood which is weighing on safe havens, like the yen. The common currency has taken advantage of the prevailing risk appetite to rally nearly 2% from 115.70 lows on Monday, past two-month highs at 117.80 to consolidate below 118.20.

Euro rallies on a risk-on market

The euro remains bid against safer assets amid market optimism. With the major economies planning to start lifting of COVID-19 restrictions, investors hopes of an economic recovery have been fuelling risk appetite.

Furthermore, the agreement between France and Germany on a €500 billion fund to support coronavirus stricken members, has eased concerns about the confrontation between Union members, increasing hopes of a fiscal union. All this has added buying pressure on the euro to outperform its main peers.

EUR/JPY might aim to 118.58/63 or higher – Credit Suisse

According to FX analysts at Credit Suisse, a close above 117.83 might increase bullish momentum for the EUR/JPY, “EUR/JPY has cleared key resistance from the late April/early May highs at 117.77/83 and assuming a close above here is achieved, this would not only see the large bear ‘triangle’ negated, it would instead see a base established to mark an important turn higher, with resistance next at 118.58/63, then the April highs at 119.01/04.”

EUR/JPY key levels to watch