EUR/JPY clings to gains near 131.50, looks to FOMC

• EUR/JPY clinches fresh YTD highs near 131.70.
• Higher US yields keep the yen offered so far.
• The FOMC is expected to leave policy unchanged.

The determined selling pressure in the Japanese yen continues to fuel the upside in EUR/JPY, this time to new 2021 highs in the 131.65/70 band.

EUR/JPY focused on the FOMC

EUR/JPY extends the weekly advance for the fourth consecutive session, although it comes under some selling pressure soon after recording new YTD peaks near 131.70 earlier on Wednesday.

Further recovery in yields of the US 10-year reference to the 1.65% area sustain the selling pressure in the Japanese safe haven, all rendering in extra legs to EUR/JPY in spite of the offered noted around the European currency.

The dollar, in the meantime, stays bid ahead of the FOMC event due later in the European evening. Consensus among traders already ruled out any modification of the current monetary conditions, although Chief Powell is expected to deliver an upbeat assessment of the US economy and the ongoing rebound.

Earlier in the session, the German Consumer Confidence tracked by GfK receded to -8.8 for the month of May.

EUR/JPY relevant levels

So far, the cross is gaining 0.05% at 131.48 and a surpass of 131.67 (2021 high Apr.28) would pave the way for a test of 131.98 (2018 high Jul.17) and then 133.13 (monthly high Sep.21 2018). On the downside, the next support emerges at 129.59 (50-day SMA) followed by 128.29 (weekly low Mar.24) and finally 128.01 (100-day SMA).