EUR/JPY extends gains above 130.50 as yen falls

A weaker yen in the market boosted the EUR/JPY pair on Monday. The euro gained more than a hundred pips from Friday’s close, improving the short-term outlook. Still, it remains below key resistance levels, consolidating not far from 2017 highs. 

Risk appetite boosts EUR/JPY 

Rising equity prices around the world and falling US bonds pushed the yen to the downside. USD/JPY gained 150 pips while the Dow Jones rose almost 200 points, rising back above 22,000. The 10-year yield is up for the third day in a row and reached 2.13%. 

EUR/JPY peaked at 130.89, the highest since Draghi’s press conference last Thursday and at the moment it trades at 130.80, up a hundred pips from last week close. 

The pair holds a bullish tone but still remains limited below several strong resistance levels. The first one is seen at 131.00 and a consolidation above would clear the way for at test of 131.60. That area capped the rally during August and a consolidation on top would end a 2-month consolidation phase, signaling more gains ahead. 

On the downside, support levels might be located at 129.90/95 (daily low), 129.35 (last week low) and 129.10 (Aug 23 high).