- Combination of decline in equity markets and decline in yields favors the yen.
- EUR / JPY unchanged for the week, after reversing near 129.70.
The EUR / JPY extended the pullback on Friday and fell to 128.05, thus erasing all gains for the week. Since Thursday’s request, the highest in nearly four weeks, he lost 150 pips.
The pullback started first as a momentary loss for the euro and then fueled by a strengthening yen. The Japanese currency is among the strongest on Friday amid falling yields on US Treasuries and stocks.
The main Wall Street indices point to an open with falls around 0.65%. In turn, the 10-year Treasury bond yields 1.40% and the 30, 1.83%, both below the level prior to the Federal Reserve meeting.
Technical overview
The reversal of the EUR / JPY back below the 20-day moving average, implies a significant loss of strength for the euro. If the fall is extended below 128.00, with a daily close, the negative tone would be reinforced, enabling a possible test to the December floor at 127.35.
To the upside, the euro needs to rebound and sustain above 129.00 to lay the foundations for a stronger bullish move.
Technical levels
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