- EUR / JPY is moving higher and rises above the 126.00 level.
- A weaker USD supports the EUR on Tuesday.
- The ECB and BoJ rate decisions remain the most prominent events later this week.
The improvement in sentiment around the common currency motivates the crossing EUR/JPY to partially reverse the recent decline and recover the key level of 126.00.
EUR / JPY now targeting yearly highs at 127.50
EUR / JPY stops a 7 day negative streak, after being rejected from the yearly highs near the 127.50 level earlier in the month.
Tuesday’s dollar downward correction is offering support to the common currency and helps the EUR / JPY cross bounce from the 2021 lows reached on Monday just above the round level of 125.00.
Indeed, as US markets resume normal activity after Monday’s Martin Luther King holiday, the dollar looks weaker amid consolidation sentiment in US 10-year benchmark yields, just below the 1.12%.
Earlier in the day, The German ZEW survey showed that economic sentiment, both in Germany and the eurozone in general, improved to 61.8 and 58.3, respectively, for the current month.
On the other side of the Atlantic, the only economic publication will be the ICT flow data for the month of November.
Later in the week all the attention will be on the monetary policy meetings of the ECB and the BoJ.
Relevant EUR / JPY levels
At the time of writing, the EUR / JPY cross is gaining 0.77% on the day, trading at 126.15. The next bullish barrier is at 127.49 (high of January 7), followed by 130.18 (high of November 7, 2018) and 133.13 (high of September 21, 2018). On the other hand, a drop below 125.08 (January 18 low), would target 124.75 (100-day SMA) and finally 124.55 (50% Fibonacci retracement of the November-January movement).
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