EUR/JPY stays bid, clings to gains below 134.00

EUR/JPY fades the earlier spike beyond the 134.00 level.
The yen depreciates further on USD-strength.
German Retail Sales contracted 4.4% MoM in April.

Pablo Piovano FXStreet

Further JPY weakness fuelled the earlier upside in EUR/JPY to the area of recent 2021 tops beyond 134.00 the figure on Wednesday.

EUR/JPY faces a potential corrective move

EUR/JPY regains the smile and keeps the bid bias unchanged on Wednesday, quickly leaving behind Tuesday decent pullback and flirting once again with the 134.00 neighbourhood.

The increasing selling mood surrounding the Japanese yen has been the solid catalyst behind the rally in the cross in past weeks to levels last seen in February 2018.

In addition, the better mood in the risk-associated universe also collaborated with the multi-month positive streak in EUR/JPY, advanced uninterruptedly since November 2020 lows in the 121.70 region.

Data wise in the euro area, German Retail Sales contracted at a monthly 4.4% in April and Producer Prices in the larger bloc rose above forecasts 1.0% MoM and 7.6% YoY, also in April.

The cross could attempt some consolidation in the veery near-term, mainly in response to its almost-overbought condition and following the cautious note in the broader markets ahead of the release of May’s Nonfarm Payrolls on Friday.

EUR/JPY levels to consider

So far, the cross is gaining 0.04% at 133.72 and a surpass of 134.12 (2021 high Jun.1) would pave the way for a test of 134.40 (monthly high Sep.2017) and then 134.50 (monthly high Oct.2017). On the downside, the next support at 132.52 (weekly low May 24) followed by 131.64 (weekly low May 12) and finally 130.98 (monthly low May 5).

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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