EUR/JPY looks firmer near the 128.00 region

• EUR/JPY clinched fresh yearly tops around 128.00.
• The selling bias in the greenback lends support to the cross.
• EMU’s Industrial Production contracted 1.6% MoM in December.

The softer note in the greenback is fuelling the upbeat mood in the risk complex and pushes EUR/JPY to new YTD highs in the 128.00 neighbourhood.

EUR/JPY in more than 2-year highs

EUR/JPY extends the upside for yet another session at the beginning of the week and reaches levels last seen in December 2018 around 128.00.

The improved sentiment in the risk-associated universe favours the continuation of the march north in the cross. In fact, higher US yields have been sustaining the selling pressure in the Japanese currency, while the downtrend in the dollar lifts the euro and its peers, all against the backdrop of the reflation/vaccine rollout trade.

In the euro docket, Industrial Production in the broader Euroland contracted at a monthly 1.6% during December, sharply reversing the previous 2.6% expansion. Still in the euro area, the trade surplus widened to €29.2 billion, also in December.

Data wise in Japan, preliminary GDP figures showed the economy is expected to expand 3.0% QoQ during the October-December 2020 period and 12.7% on an annualized basis.

EUR/JPY relevant levels

At the moment the cross is gaining 0.54% at 127.77 and faces the next up barrier at 127.97 (2021 high Feb.15) followed by 130.18 (monthly high Nov.7 2018) and then 133.13 (monthly high Sep.21 2018). On the other hand, a drop below 126.10 (monthly low Feb.4) would aim for 125.59 (low Jan.27) and finally 125.08 (2021 low Jan.18).