- EUR/JPY managed to squeak out fresh multi-year highs around the 127.20 mark on Wednesday but has since slipped back under 127.00.
- The pair was lifted amid a risk-on market vibe.
- JPY might recover some ground if concerns regarding violence in Washington escalate.
EUR/JPY saw significant upside during the early part of Wednesday’s European session, rallying from below 126.50 to above 127.00 and then onto fresh highs since March 2019 above 127.20. Driving the move has been the market’s broadly risk-on reaction to the news that the Democrats had won a surprise victory in the US Senate elections in Georgia, handing them control over the legislation that will be able to pass in Congress. Markets are betting that that means significant additional fiscal stimulus, hence why US and global stocks, crude oil markets and risk-sensitive currencies moved higher and why JPY has underperformed.
EUR/JPY has slipped back from highs in recent trade, however, and is under 127.00 again, with the bulls lacking the conviction as of yet to push the pair towards 2019 highs at 127.50. A further improvement in the market’s appetite for risk over the coming days might be enough to do it.
Such a move seems unlikely to happen during Thursday’s Asia session. Risk appetite has taken a knock in recent trade and JPY has picked up a tad amid concerns over violence in the US Capitol, as pro-Trump protestors seek to disrupt the Congressional certification of the November 2020 presidential election result. The situation will likely be brought under control soon, and Congress to be able to return to certifying the election, but risks of further “hiccups” in the transition to the Biden administrations over the next few weeks will be worth watching out for.
At present, EUR/JPY trades with gains of around half a percent on the day or just under 70 pips.
EUR/JPY looking for a decisive break above 127.00
EUR/JPY is looking for a decisive break above 127.00 that has eluded the pair on multiple occasions since August 2020. Back in August 2020, the pair managed to fleeting hit highs in the 127.10s, before sliding back to lows under 1.2200. Since mid-December, the pair has again been flirting with the 127.00 level, but despite making it as high as 127.20 on Wednesday, it has slipped back below. Bulls are on notice for a decisive break above this level that would bring into focus the 2019 high of 127.50.
EUR/JPY weekly chart
-637455629418965980.png)
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
AUD/USD defends 0.6400 after Chinese data dump
AUD/USD has found fresh buyers near 0.6400, hanging near YTD lows after strong China's Q1 GDP data. However, the further upside appears elusive amid weak Chinese activity data and sustained US Dollar demand. Focus shifts to US data, Fedspeak.
USD/JPY stands tall near multi-decade high near 154.50
USD/JPY keeps its range near multi-decade highs of 154.45 in the Asian session on Tuesday. The hawkish Fed expectations overshadow the BoJ's uncertain rate outlook and underpin the US Dollar at the Japanese Yen's expense. The pair stands resilient to the Japanese verbal intervention.
Gold: Buyers take a breather below $2,400 amid easing geopolitical tensions
Gold price is catching a breath below $2,400 in Asian trading on Tuesday, having risen over 1% in the US last session even on a solid US Retail Sales report, which powered the US Dollar through the roof. Easing Middle East geopolitical tensions and strong Chinese data could cap Gold's upside.
SOL primed for a breakout as it completes a rounding bottom pattern
Solana price has conformed to the broader market crash, following in the steps of Bitcoin price that remains in the red below the $65,000 threshold. For SOL, however, the sensational altcoin could have a big move in store.
Israel-Iran military conflict views and takeaways
Iran's retaliatory strike on Israel is an escalation of Middle East tensions, but not necessarily a pre-cursor to broader regional conflict. Events over the past few weeks in the Middle East, more specifically this past weekend, reinforce that the global geopolitical landscape remains tense.