- EUR / JPY regains bullish momentum and retests 128.00.
- The dollar regains attention despite stable returns.
- J. Powell of the Fed will testify before Congress later in the session.
The selling bias around the Japanese safe haven gives additional wings to the EUR/JPY and pushes it back towards 128.00.
EUR / JPY now look at Powell
EUR / JPY remains in trade near the 128.00 zone amid decent gains on Tuesday’s turnaround, always following the selling pressure hitting the Japanese safe haven and the renewed rise in the US dollar.
Indeed, the risk space appears to be under pressure as the dollar manages to regain some composure after falling for several days. Meanwhile, 10-year US bond yields have fallen from recent highs near the 1.40% level and remain within a tight range around 1.36% so far.
At the beginning of the session, the final inflation figures for January in the euro area showed that the headline CPI rose 0.9% compared to the previous year and 1.4% compared to the core CPI. Both figures agreed with preliminary readings.
Later Tuesday, Chief Powell is expected to testify before Congress on the state of the economy, with investors closely watching for any signs of a possible downsizing of the current QE program, always against the backdrop of growing concern about inflation.
Right now, the cross is gaining 0.22% at 127.97 and faces next resistance at 128.45 (Feb 17, 2021 high) followed by 129.25 (Dec 13, 2018 high) and then 130.14 (Nov 7, monthly high). 2018). On the other hand, a drop below 127.30 (weekly high on February 17) would point to 126.10 (monthly low on February 4) and finally 125.08 (low on January 18, 2021).