• EUR/JPY advances well past the 131.00 mark on Thursday.
  • Extra gains now seen testing 132.00 and beyond.

EUR/JPY extends the sharp recovery for yet another session and this time further north of the 131.00 hurdle.

The intense move higher in the cross has been exacerbated following the recent breakout of the key 200-day SMA and now targets the round level at 132.00 ahead of minor obstacles at the July 1 high at 132.43 and the June 23 high at 132.69, all prior to another Fibo level at 132.79.

In the broader scenario, while above the 200-day SMA at 129.85, the outlook for the cross is expected to remain constructive.

EUR/JPY daily chart

 

  • EUR/JPY advances well past the 131.00 mark on Thursday.
  • Extra gains now seen testing 132.00 and beyond.

EUR/JPY extends the sharp recovery for yet another session and this time further north of the 131.00 hurdle.

The intense move higher in the cross has been exacerbated following the recent breakout of the key 200-day SMA and now targets the round level at 132.00 ahead of minor obstacles at the July 1 high at 132.43 and the June 23 high at 132.69, all prior to another Fibo level at 132.79.

In the broader scenario, while above the 200-day SMA at 129.85, the outlook for the cross is expected to remain constructive.

EUR/JPY daily chart

 

Christine Lagarde, President of the Europen Central Bank (ECB), said on Thursday that they continue to view the inflation upswing as being largely driven by temporary factors, as reported by Reuters.

Additional takeaways

“The rebound phase of the euro area economy is increasingly advanced.”

“We see the risks surrounding the euro area growth outlook as being broadly balanced.”

“Price pressures could become more persistent if supply bottlenecks last longer or wages rise more than is currently anticipated.”

“There is no evidence of significant second-round effects through wages.”

“The governing council regularly recalibrates the net purchases under the Pandemic Emergency Purchase Programme (PEPP) based on a joint assessment of financing conditions and the inflation outlook.”

Market reaction

The EUR/USD pair edged slightly lower from session tops after these comments and was last seen gaining 0.14% on the day at 1.1608.

Christine Lagarde, President of the Europen Central Bank (ECB), said on Thursday that they continue to view the inflation upswing as being largely driven by temporary factors, as reported by Reuters.

Additional takeaways

“The rebound phase of the euro area economy is increasingly advanced.”

“We see the risks surrounding the euro area growth outlook as being broadly balanced.”

“Price pressures could become more persistent if supply bottlenecks last longer or wages rise more than is currently anticipated.”

“There is no evidence of significant second-round effects through wages.”

“The governing council regularly recalibrates the net purchases under the Pandemic Emergency Purchase Programme (PEPP) based on a joint assessment of financing conditions and the inflation outlook.”

Market reaction

The EUR/USD pair edged slightly lower from session tops after these comments and was last seen gaining 0.14% on the day at 1.1608.

  • USD/JPY struggled to capitalize on its modest intraday uptick amid renewed USD selling bias.
  • The risk-on impulse undermined the safe-haven JPY and might help limit any further losses.
  • Slight overbought RSI could trigger some long-unwinding trade and deeper corrective slide.

The USD/JPY pair erased a major part of its intraday gains to the 113.60 region and was last seen hovering just a few pips above daily lows, around the 113.30-35 region. 

The US dollar came under some renewed selling pressure during the early part of the European session and extended the previous day’s retracement slide from 13-month tops. This, in turn, was seen as a key factor that acted as a headwind for the USD/JPY pair, though the risk-on impulse undermined the safe-haven Japanese yen and helped limit any deeper losses.

Looking at the technical picture, the recent strong positive momentum from the vicinity of the 109.00 level stalled near a resistance marked by the top boundary of an upward sloping channel. RSI on the daily chart is still holding in the overbought territory, which might trigger some long-unwinding trade and set the stage for a deeper pullback for the USD/JPY pair.

That said, the lack of any meaningful slide warrants some caution before confirming that the USD/JPY pair has topped out in the near term and positioning for any further depreciating move. From current levels, the 113.00 round-figure mark seems to act as immediate strong support, which if broken decisively should prompt aggressive technical selling.

The USD/JPY pair might then accelerate the downfall towards testing the next relevant support near the 112.25-20 horizontal zone. Any subsequent decline might still be seen as a buying opportunity and remain limited near the 112.00 round figure.

On the flip side, the 113.55-60 region now seems to have emerged as an immediate strong resistance, above which the USD/JPY pair could challenge the trend-channel barrier just ahead of the 114.00 mark. Some follow-through buying will be seen as a fresh trigger for bullish traders and pave the way for an extension of a multi-week-old bullish trend.

USD/JPY 4-hour chart

fxsoriginal

Technical levels to watch

 

  • USD/JPY struggled to capitalize on its modest intraday uptick amid renewed USD selling bias.
  • The risk-on impulse undermined the safe-haven JPY and might help limit any further losses.
  • Slight overbought RSI could trigger some long-unwinding trade and deeper corrective slide.

The USD/JPY pair erased a major part of its intraday gains to the 113.60 region and was last seen hovering just a few pips above daily lows, around the 113.30-35 region. 

The US dollar came under some renewed selling pressure during the early part of the European session and extended the previous day’s retracement slide from 13-month tops. This, in turn, was seen as a key factor that acted as a headwind for the USD/JPY pair, though the risk-on impulse undermined the safe-haven Japanese yen and helped limit any deeper losses.

Looking at the technical picture, the recent strong positive momentum from the vicinity of the 109.00 level stalled near a resistance marked by the top boundary of an upward sloping channel. RSI on the daily chart is still holding in the overbought territory, which might trigger some long-unwinding trade and set the stage for a deeper pullback for the USD/JPY pair.

That said, the lack of any meaningful slide warrants some caution before confirming that the USD/JPY pair has topped out in the near term and positioning for any further depreciating move. From current levels, the 113.00 round-figure mark seems to act as immediate strong support, which if broken decisively should prompt aggressive technical selling.

The USD/JPY pair might then accelerate the downfall towards testing the next relevant support near the 112.25-20 horizontal zone. Any subsequent decline might still be seen as a buying opportunity and remain limited near the 112.00 round figure.

On the flip side, the 113.55-60 region now seems to have emerged as an immediate strong resistance, above which the USD/JPY pair could challenge the trend-channel barrier just ahead of the 114.00 mark. Some follow-through buying will be seen as a fresh trigger for bullish traders and pave the way for an extension of a multi-week-old bullish trend.

USD/JPY 4-hour chart

fxsoriginal

Technical levels to watch

 

Japanese Prime Minister Fumio Kishida said on Thursday that new spending to aid domestic development and production of vaccines, drugs to treat COVID-19 patients will be included in the stimulus, as reported by Reuters.

Additional takeaways

“Will take steps to fix supply-demand balance to address sharp fall in domestic prices.”

“Will extend to march special add-on subsidies to support jobs.”

“Will start preparations to resume government travel discount programme in a re-modelled fashion.”

“Will make bold hike in tax exemptions to firms that raise wages.”

Market reaction

The USD/JPY pair showed no immediate reaction to these comments and was last seen posting small daily gains at 113.32.

Japanese Prime Minister Fumio Kishida said on Thursday that new spending to aid domestic development and production of vaccines, drugs to treat COVID-19 patients will be included in the stimulus, as reported by Reuters.

Additional takeaways

“Will take steps to fix supply-demand balance to address sharp fall in domestic prices.”

“Will extend to march special add-on subsidies to support jobs.”

“Will start preparations to resume government travel discount programme in a re-modelled fashion.”

“Will make bold hike in tax exemptions to firms that raise wages.”

Market reaction

The USD/JPY pair showed no immediate reaction to these comments and was last seen posting small daily gains at 113.32.