- EUR / JPY loses some ground after hitting highs near 130.50.
- Higher US yields keep the tone offered around the dollar.
- Investors shift their focus to the next FOMC meeting.
The tone offered in the single currency led to EUR/JPY to trim early gains to new 2021 highs in the 130.50 area.
EUR / JPY offered by the JPY selloff
The persistent upward movement in US yields sustains the growing selling interest around the JPY safe haven and thus underpins the EUR / JPY rally to the levels last traded in October 2018 beyond. of the key hurdle of 130.00.
The tone offered around the European currency reflects investors’ preference for the dollar in the context of the better performance of the US economy after the pandemic in combination with the launch of firm vaccines and prospects for higher inflation by the end of the year.
On the week, market participants will be closely monitoring the FOMC event on Wednesday, looking for any mention by President Powell of the recent performance of US yields and / or a possible revision of the trajectory of interest rates by part of the Committee.
Relevant levels
Right now, the cross is shedding 0.08% at 130.17 and a dip below 128.79 (20-day SMA) would expose 128.18 (March 2 monthly high) and finally 127.30 (February 17 low). On the upside, the next resistance is located at 130.48 (March 15, 2021 high) followed by 131.00 (psychological level) and then 131.98 (July 17, 2018 high).
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