- EUR / JPY extends the rally and tests levels above 127.00.
- The dollar remains weak, as is the yen in a context of modest rise in the stock markets.
Some weakness around the dollar continues to support riskier assets and encourages the EUR / JPY to return to Wednesday’s highs above the 127.00 zone.
After having found support above 126.70, the EUR / JPY rebounded and is trading at 127.04, in the area of ​​the highs of the day and close to important resistance.
The persistent weakness surrounding the dollar allows the continuation of buying interest in assets associated with more risk, although the recent drop in US yields appears to have lent some support to the Japanese yen. Today Wall Street yields and futures are up, supporting the EUR / JPY.
Regarding developments in the Eurozone, the European Commission (EC) now forecasts that the bloc’s economy will expand 3.8% this year and 3.8% in 2022 (from 4.2% and 3.0% in the autumn report of 2020, respectively). Regarding inflation, the EC expects consumer prices to rise 1.4% in 2021 and 1.3% over the next year (from 1.1% and 1.3%, respectively).
The US jobless claims report could add volatility on a limited-haul day.
Relevant levels EUR / JPY
Right now, the cross is gaining 0.23% at 127.02 and is facing the next upward barrier in the 127.50 zone (2021 high on Jan 7) followed by 130.18 (monthly high on Nov 7, 2018) and then 133.13 (monthly maximum of September 21, 2018). On the other hand, a fall below 126.10 (February 4 monthly low) would point to 125.59 (January 27 low) and finally 125.08 (2021 low on January 18).
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