- EUR / JPY adds to recent gains above 129.00 on Thursday.
- The selling mood in the Japanese yen supports the cross.
- Initial US claims, Powell is next high on the economic agenda.
The continuation of the selling bias in the Japanese yen gives additional wings to the EUR/JPY past 129.00 in the second half of the week.
EUR / JPY focused on risk trends, data
Investor concerns about potential inflation in the coming months, stemming solely from the planned increase in US fiscal stimulus, continue to support the dollar, thereby hurting sentiment around the risk space and sponsoring new flows of output to the Japanese yen.
In fact, US 10-year yields managed to regain the level of 1.50% and higher in previous sessions, an area last visited more than a year ago.
Meanwhile, vaccine reflation / trade now appears to be an additional factor sustaining the dollar’s recovery to the detriment of demand for riskier assets.
On the US agenda, initial claims increased by 745,000 over the past week, beating expectations. Additionally, unit labor costs increased 6.0% quarter-on-quarter in the fourth quarter and non-farm productivity contracted 4.2% quarter-on-quarter during the same period. Previously, Challenger job cuts fell to 34,531 over the past month (from 79,552).
Technical levels
Right now, the cross is gaining 0.16% at 129.30 and is facing next resistance at 129.87 (February 24, 2021 high) followed by 130.00 (psychological level) and then 130.14 (November 7, 2018 monthly high). On the other hand, a drop below 128.18 (March 2 weekly / monthly high) would target 127.30 (February 17 low) and finally 126.95 (50-day SMA).
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