EUR/JPY Struggles to Break a Three-year High Near 134.00
- EUR/JPY this week moved to a three-year high as bulls keep pushing higher
- Eurozone inflation spiked to 2% in May, ECB dismisses higher prices as “temporary”
The EUR/JPY pair has been having a stellar year so far that has extended the gains from the second half of last year. The EUR/JPY exchange rate has advanced over 6% year-to-date, from early January’s levels near 126.00 to the current market price of 133.82. Along the way, the pair has cleared major resistance levels, and just this week reached a three-year high which so far has been difficult to overtake.
On Tuesday, the pair reached a peak of 134.12, a rate not seen since February 2018. Bulls were unable to break the strong resistance. Thus the Euro remained pinned below ¥134. In the last few days, traders have been unsuccessful to decide who will take the pair further as the EUR/JPY consolidated near the current market price last week.
Over the course of the previous 12 months, the EUR/JPY has appreciated by over 12%. However, the general bullish trend has been going on for the past 13 months, which has driven the pair higher by 17%. The Japanese Yen has broadly lost value among currencies this year. The USD/JPY has jumped by 6.3%. Even after the US dollar has declined significantly in May due to concerns that higher inflation in the US could leave a durable and long-lasting footprint on the US economy.
Inflation in the Eurozone
On the inflation issue, the latest price data in Europe showed on Tuesday that the Eurozone inflation for May rose 2.0%, surpassing ECB’s target of just below 2.0%. The inflation data did not significantly impact the EUR/JPY pair as the exchange rate continued to gravitate toward its consolidation levels.
The European Central Bank attributed higher inflation to one-off factors such as increased energy prices that are expected to drop as the economy moves further into reopening. European Central Bank President Christine Lagarde commented prior to the release that if any inflation above ECB’s target is to occur, it will most likely be “of temporary nature” and will “return to lower levels”.
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