- The euro finds support at 128.35 and attempts to regain 129.00.
- The yen loses ground as market sentiment improves.
- EUR/JPY remains trapped between 128.50 and 129.40.
The euro is trading higher against the Japanese yen on Thursday, trimming losses after Wednesday’s reversal, favoured by a certain yen weakness. The pair is trying to return above. 129.00 after bouncing from two-week lows at 128.35.
The yen loses ground on a brighter market mood
The common currency has taken advantage of a certain yen weakness in a moderately positive trading session. The world’s major stock markets are posting gains beyond 1%, with the Dow Jones 1.38% higher, the S&P 500 trading 1.30% above opening levels, and the Nasdaq 1.56% up at the time of writing.
Investors seem to have set aside concerns about surging inflationary pressures and the standoff in the US Congress regarding the debt ceiling, which has favored risky assets to the detriment of safe-havens like the Japanese yen.
The focus has shifted towards the release of the US employment report, due tomorrow, which will be analyzed in monetary policy terms. With the market waiting for the Federal Reserve’s official announcement of QE tapering, a strong payrolls report is likely to give a fresh boost to the USD.
EUR/JPY still trapped between 128.50 and 129.40
In a broader perspective, the pair has remained moving in a range around 129.00 after last week’s reversal from the 130.40 area. On the upside, immediate resistance lies at 129.40/50 (October 4, 6 highs) with the next targets above here at 130.00 and the area between 130.50 and 130.75 (September 3, 8, and 29 highs).
On the downside, immediate support lies at 128.50 (October 1 low) before 127.90/128.00 area (August 19, September 23 low) and then 127.30 (February 18 low).
Technical levels to watch
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