- EUR / JPY extends the slide near 126.50 on Monday.
- The US dollar continues to strengthen thanks to higher yields.
The softer tone of the common currency weighs on the EUR/JPY and drag the cross to new lows near region 126.50.
EUR / JPY weaker due to EUR sell-off
Renewed buying interest in the US dollar keeps risk appetite under downward pressure early in the week, motivating the EUR / JPY cross to retreat for the second day in a row, although it has found decent support near 126.50 so far.
In fact, investors’ assessment of the next interest rate move by the Federal Reserve has provided unexpected and moderate support to the US dollar and has pushed US yields to multi-month highs beyond 1.10%, all to the detriment of the assets with the highest perceived risk.
Regarding the economic data of the euro, Investor confidence measured by the Sentix index improved to 1.3 for the current month, while industrial production in Spain contracted 3.8% year-on-year until November.
During the European afternoon, ECB President Christine Lagarde will participate in a panel discussion at the One Planet Summit in Paris.
Relevant EUR / JPY levels
At the time of writing, the EUR / JPY cross is shedding 0.23% on the day, trading at 126.75. A drop below 126.47 (21-day SMA), would target 125.70 (December 16, 2020 low) and finally 124.91 (55-day SMA). On the other hand, the next hurdle is at 127.49 (maximum of January 7), followed by 130.18 (maximum of November 7, 2018) and 133.13 (maximum of September 21, 2018).
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