EUR/JPY resumes the upside and focuses on 128.00

• EUR/JPY regains upside momentum and retests 128.00.
• The dollar regains attention despite steady yields.
• Fed’s J.Powell will testify before the Congress later in the session.

The selling bias around the Japanese safe haven lends extra wings to EUR/JPY and pushes it back to the 128.00 neighbourhood.

EUR/JPY now looks to Powell

EUR/JPY keeps the trade close to the 128.00 area amidst decent gains on turnaround Tuesday, always following the selling pressure hitting the Japanese safe haven and the renewed upside in the US dollar.

In fact, the risk complex appears under pressure, as the greenback manages to regain some composure following the multi-day decline. Yields of the US 10-year note, in the meantime, have receded from recent tops near the 1.40% level and navigate within a tight range around 1.36% so far.

Earlier in the session, final January inflation figures in the euro area showed the headline CPI rose 0.9% from a year earlier and 1.4% when comes to the core CPI. Both prints matched the preliminary readings.

Later on Tuesday, Chief Powell is expected to testify before the Congress on the state of the economy, with investors closely watching any hint of a potential tapering of the current QE programme, always against the backdrop of rising inflation concerns.

EUR/JPY relevant levels

At the moment the cross is gaining 0.22% at 127.97 and faces the next resistance at 128.45 (2021 high Feb.17) followed by 129.25 (monthly high Dec.13 2018 and then 130.14 (monthly high Nov.7 2018). On the other hand, a drop below 127.30 (weekly high Feb.17) would aim for 126.10 (monthly low Feb.4) and finally 125.08 (2021 low Jan.18).