- EUR/JPY hits intraday high since December 2014.
- The yen collapses on rise in treasury bond yields.
- The euro favored before expectations for the ECB meeting.
On day ten of the EUR/JPY rally, the cross instead of pausing accelerated the rally. The euro rises more than 200 pips on Wednesday and reached 144.21, the highest intraday level since December 2014.
Technical indicators are overbought, but this does not seem to matter. The EUR/JPY continues to search for a new equilibrium level and does not stop.
Euro and yen: the extremes
The yen is the worst performer on Wednesday, while the euro is among the strongest. This makes the rise of the EUR/JPY has accelerated. In the last three weeks, the cross has risen almost a thousand pips.
The euro is benefiting from the rise in European bond yields. The German 10-year tranche is at its highest since 2014 after exceeding 1.35%. This occurs the day before the meeting of the European Central Bank (ECB) in which the announcement of the end of the purchase program is expected and leaves a guideline for the future.
The market expectation is that the ECB will raise interest rates in July and possibly by 50 basis points in September and October. What he says tomorrow could be key to expectations and favor an increase in volatility. Eurozone growth data released on Wednesday helped set the tone for the euro.
The rise in yields is not only a phenomenon in the Eurozone and it also occurs in the US The 10-year rate is at 3.02% and the 30-year rate at 3.17%, close to the recent peak. This is a negative factor for the yen, which explains the fall it is having.
Should the USD/JPY rally continue (it is at 134.30, maximum since 2002), it would be expected that more voices would be heard from Japan, warning of unidirectional movements, increasing the possibilities of some type of action in the currency market. .
Technical levels
Source: Fx Street
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