- EUR/JPY climbed back above 136.50 on Wednesday as the yen failed to benefit from lower US yields.
- The bulls await a break to yearly highs in the 137.50 area if Thursday’s ECB meeting turns out to be aggressive.
US yields continued their recent pullback on Wednesday, despite a worrying US producer price inflation report suggesting that inflationary pressures do not seem likely to ease anytime soon, but this is not offered plenty of respite to the battered yen. Despite the recent negative news flow on the Russo-Ukrainian front that would normally be seen as negative for the euro, the EUR/JPY advanced on Wednesday to move back above the 136.50 mark.
The pair is now eyeing a retest of previous weekly highs just above the 137.00 level, a break above which would open the door for a run to recent multi-year highs in the 137.50 area. Recent comments from Japan’s fiscal and monetary policy makers have suggested they are more concerned with the rate of JPY depreciation in global currency markets, rather than targeting specific levels.
That has been a disappointment to those who are betting that further pressure could give the yen a short-term boost. EUR/JPY bulls are hoping Thursday’s ECB meeting may offer the pair some impetus in the form of, perhaps, a further change in the bank’s tone regarding how concerned it is about inflation and how fast it sees itself tightening. the configuration of monetary policy.
A break above 137.50 would see EUR/JPY trading back to its highest levels since 2015 and bulls would quickly turn their attention to the 140 level and June 2015 highs at 141.00.
Technical levels
Source: Fx Street
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