- EUR / JPY reversal from three-week highs at 130.35 contained at 130.00.
- The euro appreciates for the fifth day in a row against a weaker yen.
- The yield differential between the United States and Japan is hurting the yen across the board.
The reversal of EUR/JPY From the three-week highs at 130.35 seen early Tuesday it has been short-lived as the pair found buyers at a psychological level of 130.00 to defend its short-term bullish bias.
Japanese Yen Under Pressure Amid Rising US Yields
The strong advance in US bond yields, with the 10-year yield above 1.5% or the end of the quantitative easing program, has hit the Japanese yen as a safe haven across the board.
In this context, the common currency has taken advantage of a weaker yen, despite the energy crisis and political uncertainty in Germany, which are clouding the prospects for economic growth in the eurozone, to register a five-day rally. The euro has appreciated around 1.75% over the past five days to break the aforementioned 130.00 level and approach a two-month high at 130.70.
EUR / JPY: The next bullish target is 130.70
On the upside, above the psychological level of 130.00, the next significant area would be at 130.70 (September 3-8 highs and 20-day SMA), then 131.05 (July 14 high) and 132.30 ( July 1 high). Conversely, a reversal below 130.00 could seek support at 129.75 (Sept 28 low) and 129.40 (Sept 24 low).
Technical levels
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