- EUR / JPY moves higher as risk mood improves.
- June PMIs for Germany and EMU provide further support for risk trends.
- The ECB’s Lagarde will speak later in the session.
Improved sentiment in the risk space underpins the sell bias in the Japanese yen and pushes the EUR/JPY well past 132.00 on Wednesday.
EUR / JPY is still supported by 130.00
EUR / JPY advanced for the third consecutive session on Wednesday, extending the recovery after last week’s strong selloff to the 130.00 zone in response to the FOMC event.
Despite 10-year US yields trading sideways, investors remain skewed toward riskier assets, keeping the yen under pressure and bolstering demand for the European currency.
Furthermore, positive PMI flash results in both Germany and the euro zone also underpin the favorable sentiment around the euro.
The dollar looks weak after President Powell reiterated in his testimony Tuesday that any rate hike is still a long way off and the current higher inflation is considered temporary. Powell’s comments were later reinforced by Williams, Daly and Mester of the FOMC.
The EIA report and the FOMC’s Bowman and Bostic speeches will be released later in the session.
Technical levels
So far, the cross is gaining 0.39% to 132.59 and a breakout of 132.69 (June 23 weekly high) would point to 132.96 (20-day SMA) and then 134.50 (October 2017 monthly high). On the other hand, the next support emerges at 130.04 (monthly low on June 21) followed by 129.58 (monthly low on April 23) and finally 128.29 (weekly low on March 24).
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