EUR / JPY remains under pressure and challenges the 128.00 level

• EUR / JPY extends the move lower near the 128.00 level.
• US 10-year yields are trading near recent lows of around 1.30%.
• The markets’ attention remains on the FOMC meeting on Wednesday.

The crossing EUR/JPY moves through the lower end of the range near the 128.00 level at the start of the American session on Tuesday, extending the bearish movement for the sixth consecutive day.

EUR / JPY focuses on the Fed

EUR / JPY loses ground for the sixth day in a row and it extends the pullback after failing to advance past the 130.30 zone earlier in the month.

Although risk aversion has decreased in recent hours, lingering concerns around Evergrande in China, as well as the progress of the Delta variant they continue to limit the appetite for risk.

In addition, yields on the benchmark US 10-year bond have moved lower and have revisited the 1.30% area, some 8bp less than last week’s highs beyond the 1.38% level.

There have been no top-tier posts on Tuesday, leaving all the attention on the BoJ meeting during the Asian session on Wednesday followed by the most relevant monetary policy meeting of the Federal Reserve.

Relevant EUR / JPY levels

At the time of writing, the EUR / JPY cross is down 0.06% on the day, trading at 128.17. A break above 129.57 (200-day SMA), would point to a move to 130.00 (psychological level) and 130.74 (September 3 high). On the downside, next support is at 128.14 (Sept 20 20 low), followed by 127.93 (Aug 19 low) and 125.85 (200 week SMA).