- The euro consolidates below 129.00 capped above 128.50.
- A stronger yen hampers the euro’s recovery.
- Rising inflation in the euro area adds negative pressure on the euro.
The euro it has found support at 128.50 and has been trading sideways below 129.00 on Friday. The pair is consolidating after a two-day drop from a relevant resistance area at 130.50 / 70.
The euro does not recover against a stronger yen
The common currency was unable to post a relevant recovery on Friday after depreciating around 1.35% over the previous two days. The pair has been unable to take advantage of a widespread USD pullback as the Japanese yen has gained momentum on softer US Treasury yields and has been buoyed by investors’ concerns about stagnation in the US Congress regarding the debt limit.
The macroeconomic calendar has not been particularly favorable to the euro either. Eurozone inflation accelerated by 3.4% year-on-year in September, from 3% in August and reached its highest level since 2008. These figures confront the ECB’s idea of ​​a temporary rise in inflation and raise concerns about the impact on prospects for growth in the area.
EUR / JPY moving sideways between 128.50 and 129.00
The pair appears to have found support at 128.50 after breaking the 129.50 / 60 support area. Next, the next potential support levels could be in the area of ​​127.90 / 128.00 (August 19 low, September 23) and then 127.30 (February 18 low)
On the upside, the pair should return above the aforementioned 129.50 / 60, where the 50 and 100-day SMAs are, to ease downward pressure and attempt to hit 130.00 before targeting a key resistance area between 130.50 and 130.75. (September 3, 8 and 29 highs).
Technical levels
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