- EUR/JPY bounces off lows near 130.00 the figure.
- Lower US yields underpin the buying pressure in JPY.
- All eyes on Chief Powell’s testimony to Congress later on Wednesday.
The now better tone in the Japanese yen weighs on EUR/JPY and drags it back to the 130.20 area, posting marginal gains for the day so far.
EUR/JPY now looks to Powell
EUR/JPY trades within a narrow range above the psychological 130.00 barrier on Wednesday and attempts to resume the upside following Tuesday’s deep pullback in the wake of higher-than-expected US inflation figures.
However, the ongoing retracement in yields of the key US 10-year benchmark motivates the demand for the Japanese safe haven to re-emerge and therefore puts the cross under some downside pressure, all amidst the correction lower in the buck.
In the meantime, high US inflation, tapering prospects and potential interest rate hikes (well before expectations) will all take centre stage at Chairman Powell’s testimony to the Congress on the Monetary Policy Report, due later in the NA session.
In the calendar earlier in the session, Japan’s Industrial Production contracted at a monthly 6.5% in May, while the same indicator in the Euroland saw a 1.0% MoM contraction in the same period.
EUR/JPY relevant levels
So far, the cross is advancing 0.09% at 130.36 and a surpass of 131.12 (100-day SMA) would aim for 132.30 (50-day SMA) and finally 132.69 (weekly high Jun.23). On the downside, immediate support comes in at 129.62 (monthly low Jul.8) followed by 128.29 (weekly low Mar.24) and then 128.25 (200-day SMA).
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