EUR/JPY analysis: starting to look constructive, but 121.40 key

Valeria Bednarik FXStreet

EUR/JPY Current price: 120.58

The EUR/JPY pair soared to a fresh weekly high of 120.71 as the advance in US equities sent the JPY lower against all of its major rivals. Demand for USD-related assets re-surged after the new US administration announced an upcoming tax reform that will be unveiled in "the next two or three weeks," according to President Trump. US Treasury yields recovered from the multi-week low posted on Wednesday, with the 10-year benchmark standing at 2.39%. Data released in Japan during the past Asian session was quite encouraging, as seasonally adjusted core machinery orders in December rose by 6.7% from the previous month, and by the same percentage yearly basis, a sign that capital expenditure is picking up. From a technical point of view, the risk of a bearish extension have been reverted, although a stronger advance seems now limited, given that in the 4 hours chart, the price remains well below its 100 and 200 SMAs that maintain bearish slopes, whilst technical indicators have lost upward strength within positive territory. The pair needs to regain the 121.40 level to look more constructive during the following sessions, with scope then to test the 124.10 high posted mid December.

Support levels: 120.10 119.60 119.25

Resistance levels: 120.70 121.05 121.40

View Live Chart for the EUR/JPY

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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