The EUR/JPY is rallying near the 131.00 thresholds, advances almost 1% during the day, trading at 130.93 at the time of writing. A risk-off market sentiment, as witnessed by US stocks indices which posted losses between 0.69% and 0.72%, failed to boost the safe-haven status of the Japanese yen, which was not able to gain traction against any of the G8 currencies.
Meanwhile, the single currency followed the British pound footsteps on the back of hawkish comments made by the Bank of England members, who expressed worries about inflation, and readiness to hike interest rates sooner than foreseen, despite continuing their bond purchasing program.
The EUR/JPY is trading above the 200-day moving average (DMA). The abovementioned signals that the pair could be headed for higher prices, as the 200-DMA indicates the major trend. A daily close above the latter could open the way for further gains. The first resistance level would be the July 13 high at 131.08. A breach of that level could open the door for further gains. The following resistance level would be the July 1 high at 132.42 and the June 1 high at 134.117.
On the flip side, failure at 131.00 could push the cross-currency towards 130.00. In that case, the 200-DMA at 129.80 would be the first support. A breach of that level opens the door for a test of crucial demand levels at the 50-DMA at 129.39, followed by the October 8 low at 128.86.
The Relative Strength Index (RSI) is at 63. As it is located above the 50-midline, meaning that the EUR/JPY has an upside bias.
KEY ADDITIONAL LEVELS TO WATCH
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