The EUR/JPY is still on the defensive and has fallen below 130.00.
As US yields decrease, the JPY appreciates even more.
The European Central Bank (ECB) set a symmetric inflation objective of 2%.
The risk complex is being weighed down by the strong pace of the Japanese safe haven, which brought EUR/JPY to new 3-month lows in the 129.60 zone on Thursday.
Since last Friday, the EUR/JPY has been losing momentum due to a continuing risk aversion bias, a strong dollar, and, most recently, the Japanese currency’s persistent gain in response to falling US yields.
Indeed, yields on the major US 10-year note fell to new 5-month lows earlier in the session after hitting 1.25 percent, only to bounce back to around 1.30 percent at the time of writing.
Closer to home, the ECB’s strategy review yielded no shocks, with Chairwoman Lagarde announcing that the central bank’s medium-term inflation target had been altered to a “symmetric 2 percent” goal. In addition, the ECB will preserve the CPI as the proper inflation indicator, but it will now incorporate some housing-related variables (costs of owner-occupied housing).
Higher inflation is seen as primarily transitory by the central bank, which has avoided any discussion of tapering for the time being, maintaining its broadly dovish tone.
According to the calendar, Germany’s trade surplus decreased to EUR12.6 billion in May, while the current account surplus shrank to EUR13.1 billion. Initial Claims in the United States increased by 373K WoW, little less than expected.
The cross is currently trading at 130.00, down 0.33 percent, and faces support around 129.62 (monthly low Jul.8), 128.29 (weekly low Mar.24), and then 128.12. (200-day SMA). A break over 131.02 (100-day SMA), on the other hand, would target 132.36 (50-day SMA) and finally 132.69. (weekly high Jun.23)./n
