- EUR/JPY partially reverses the recent pullback and retakes 128.50.
- US 10-year yields extend the consolidative mood pre-FOMC.
- Markets’ attention will be on the Fed’s tapering timetable, dots plot.
EUR/JPY finally seems to have regained the smile and now extends the bounce off recent lows near 128.00
EUR/JPY now looks to the Fed
After six consecutive sessions in the negative territory, some respite for EUR/JPY finally came on Wednesday and after bottoming out in the 128.00 zone.
The selling bias in the Japanese yen helps the cross to rebound from lows in the sub-128.00 area to the vicinity of 128.60 midweek.
The steady activity in US yields plus the unchanged bias from the BoJ at its meeting earlier in the session favour the depreciation of the Japanese currency, which in turn morphs into further gains in the cross.
Later in the session, the yen could face bouts of volatility considering the key FOMC event, where a potential tapering timetable and the updated “dots plot” are expected to be in the centre of the debate.
EUR/JPY relevant levels
So far, the cross is up 0.38% at 128.51 and a surpass of 129.58 (200-day SMA) would aim for a move to 130.00 (psychological level) and then 130.74 (monthly high Sep.3). On the downside, the next support comes at 127.93 (monthly low Sep.22) followed by 125.85 (200-week SMA) and finally 125.08 (2021 low Jan.18).
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