EUR/JPY extends weekly gains to the 132.70 zone

EUR/JPY moves higher as the risk-on mood improves.
German, EMU flash June PMIs lend further support to the risk trends.
ECB Lagarde speaks later in the session.

Pablo Piovano FXStreet

The improved sentiment in the risk complex props up the selling bias in the Japanese yen and pushes EUR/JPY well past the 132.00 mark on Wednesday.

EUR/JPY remains supported by 130.00

EUR/JPY advances for the third consecutive session on Wednesday and extends the recovery following last week’s sharp selloff to the 130.00 neighbourhood in response to the FOMC event.

Despite the flat performance of US 10-year yields, investors remain biased towards the riskier assets, keeping the yen under pressure and bolstering the demand for the European currency.

In addition, positive results from flash PMIs in both Germany and the Euroland also sustains the favourable sentiment surrounding the euro.

Further out, the greenback looks soft after Chairman Powell reiterated at his testimony on Tuesday that any rate hike remains way off, and the current higher inflation is seen as temporary. Powell’s comments were later reinforced by FOMC’s Williams, Daly and Mester.

Later in the session, US flash PMIs are due seconded by New Home Sales, the EIA report and speeches by FOMC’s Bowman and Bostic.

EUR/JPY relevant levels

So far, the cross is gaining 0.39% at 132.59 and a surpass of 132.69 (weekly high Jun.23) would aim for 132.96 (20-day SMA) and then 134.50 (monthly high Oct.2017). On the other hand, the next support emerges at 130.04 (monthly low Jun.21) followed by 129.58 (monthly low Apr. 23) and finally 128.29 (weekly low Mar.24).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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