EUR/JPY looks firmer around 130.00 ahead of US data

  • EUR/JPY reverses the recent weakness and regains 130.00.
  • The yen remains on the defensive on higher US yields, BoJ.
  • US Retail Sales, Consumer Sentiment next in the docket.

The selling pressure in the Japanese yen lends extra oxygen to EUR/JPY and pushes it back to the 130.00 neighbourhood.

EUR/JPY retakes 130.00

After three consecutive daily pullbacks, EUR/JPY seems to regain the smile at the end of the week on the back of the moderate selling bias in the Japanese safe haven.

Indeed, the dollar keeps pushing higher amidst the better mood in US yields, which in turn favours the offered bias in the yen. Yields of the key US 10-year reference move a tad higher around 1.32% after briefly testing sub-1.30% levels the previous session.

Extra weakness around the JPY comes after the BoJ left unchanged its policy rate at -0.10% and the yield target at 0.00% at its meeting earlier in the session, while Governor Kuroda reiterated once again (and again and again) the central bank’s readiness to pump in extra stimulus if needed. The BoJ, however, revised lower its forecasts for growth and now sees the economy expanding 3.8% in 2021 (from 4.0%) and predicts inflation at 0.6% (from 0.1%).

In the data sphere, EMU final June CPI matched the preliminary prints at 1.9% YoY and 0.9% when comes to the Core CPI.

In the US, all the looks will be upon June’s Retail Sales and the advanced U-Mich Index for the month of July.

EUR/JPY relevant levels

So far, the cross is advancing 0.19% at 129.95 and a surpass of 130.99 (weekly high Jul.12) would aim for 132.43 (monthly high Jul.1) 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 128.30 (200-day SMA).

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