EUR/JPY capped below 129.00 after rejection at 130.50 area
- The euro consolidates below 129.00 contained above 128.50.
- A stronger yen hampers euro recovery.
- Surging Eurozone inflation adds negative pressure on the EUR.
The euro has found support at 128.50 and has been trading sideways below 129.00 on Friday. The pair is consolidating after a two-day decline from a relevant resistance area at 130.50/70.
The euro fails to rebound against a stronger yen
The common currency has been unable to post a relevant recovery on Friday after having depreciated about 1.35% over the previous two days. The pair has failed to take advantage of a broad-based USD pullback, as the Japanese yen has picked up momentum on the back of softer US T-Bond yields and favoured by investors’ concerns about the impasse on the US Congres regarding the debt limit.
The macroeconomic calendar has not been particularly supportive of the euro either. Eurozone inflation accelerated 3,4% year-on-year in September, from 3% in August reaching its highest level since 2008. These figures are confronting ECB’s idea of a temporary inflation spike and raising concerns about the impact on the Area’s growth prospects.
EUR/JPY moving sideways between 128.50 and 129.00
The pair seems to have found support at 128.50 after breaking support area 129.50/60. Below here, the next potential support levels might be at the 127.90/128.00 area (August 19, September 23 low) and then 127.30 (February 18 low)
On the upside, the pair should return above the mentioned 129.50/60, where the 50 and 100-day SMA lie, to ease bearish pressure and attempt to reach 130.00 before aiming to a key resistance area between 130.50 and 130.75 (September 3, 8, and 29 highs).
Technical levels to watch