EUR/JPY off highs still up for the first time in five days

• EUR/JPY about to end 4-day slide but trimmed gains during US session. 
• Demand for the yen shows resistance. 

The EUR/JPY pair is rising for the first time after four days of losses. During the American session, it moved off highs after being unable to hold on top of 134.00. 

Yesterday the decline of the pair found support above the 133.00 area. It rebounded modestly and surged after the release of ECB minutes. The document mentioned that “the language pertaining to various dimensions of the monetary-policy stance and forward guidance could be revisited early in 2018” and signaled an upbeat assessment of the economic outlook. The possible change in the forward guidance early this year boosted the euro across the board. 

The pair peaked at 134.34 boosted by the minutes and by a rally in EUR/USD. In Wall Street, the demand for the yen returned and sent EUR/JPY under 134.00. A lower-than-expected reading in the US PPI index capped the recovery of USD/JPY. As of writing, the pair was about to test 111.00. 

EUR/JPY was trading at 133.70/75, far from the highs but still up more than 50 pips. Today’s gains seem like a normal correction after a 300-pip slide. The tone continues to favor the downside. 

Levels to watch 

To the downside, support levels are located at 133.65, 133.20 and 133.00 (daily low). While to the upside, resistance might lie at 134.35 (Jan 11 high), 134.50 and 134.90 (Dec 21 high).