EUR/JPY testing 131.90, eyeing yearly highs at 133.15

• The euro appreciated for the sixth day in a row to rest at 131.90.
• The dovish BoJ is sending the yen lower across the board.
• EUR/JPY approaching year-to-date high at 133.15.

The euro has seen a strong rally against the Japanese yen this week. The pair extended its recovery from early March lows at 124.40 to test the 131.90 resistance level, with a year-to-date high at 133.15 in the offing.

A dovish BoJ sends the yen lower

The common currency is on track for a weekly rally of nearly 3%, helped by broad-based yen weakness, as the Bank of Japan’s dovish policy stance has helped the euro regain most of the ground lost in February.

The Bank of Japan has confirmed its ultra-easy monetary policy at its latest monetary policy meeting on Friday. The bank has pledged to maintain its massive stimulus program despite rising inflation trends. With most of the world’s major central banks shifting towards monetary tightening, the BoJ’s stance is crushing yen demand.

Yen weakness has been propelling EUR/JPY to extend its rally for the sixth day in a row, despite the market’s gloom due to the lack of progress in the Russia-Ukraine peace talks, which has increased negative pressure. on the euro.

EUR/JPY – Above 131.90, the next significant target is the yearly high at 133.15

The pair appears to have found some resistance at 131.90 (16 Feb high). If that level gives way, the next potential target would be 132.60 (11 Feb high) before retesting the year-to-date high at 133.15.

Conversely, a bearish reversal below the intraday low at 131.15 and the 17 Mar low at 130.70 could seek support at the 200-Day SMA in the 130.00 area.

Technical levels