EUR/JPY is rebounding from lows near 130.00.
The buying pressure in the JPY is fueled by lower US yields.
On Wednesday, all eyes will be on Chief Powell’s testimony to Congress.
The improved tone of the Japanese yen pulls on EUR/JPY, dragging it down to 130.20, where it is currently trading with modest gains for the day.
On Wednesday, the EUR/JPY trades in a narrow range above the key 130.00 barrier, attempting to continue the upward after a significant reversal on Tuesday in the wake of higher-than-expected US inflation data.
However, the continued fall in yields on the important US 10-year benchmark encourages demand for the Japanese safe haven to re-emerge, putting downward pressure on the cross in the midst of the buck’s decline.
Meanwhile, Chairman Powell’s testimony to Congress on the Monetary Policy Report, anticipated later in the NA session, will focus on strong US inflation, tapering prospects, and probable interest rate hikes (far ahead of predictions).
Earlier in the session, Japan’s Industrial Production dropped by 6.5 percent on a monthly basis in May, while the same indicator in Euroland declined by 1.0 percent on a monthly basis in the same period.
The cross is currently up 0.09 percent at 130.36, with a break over 131.12 (100-day SMA) aiming for 132.30 (50-day SMA) and finally 132.69. (weekly high Jun.23). On the downside, 129.62 (monthly low Jul.8) provides immediate support, followed by 128.29 (weekly low Mar.24) and 128.25. (200-day SMA)./n
