EUR/JPY pushes higher and clinches 2021 highs beyond 133.00

• EUR/JPY extends the upside above the 133.00 yardstick.
• The dollar stays well on the defensive on lower yields.
• EMU advanced Q1 GDP contracted 0.6% QoQ and 1.8% YoY.

The increasing selling bias in the greenback lends extra legs to the upside momentum in the single currency and lifts EUR/JPY to new 2021 highs past 133.00 the figure on turnaround Tuesday.

EUR/JPY up on growing risk appetite

EUR/JPY quickly leaves behind Monday’s inconclusive price action and resumes the upside to levels further north of the 133.00 barrier, area last seen back in April 2018.

Investors continue to favour the riskier assets and bolster the sell-off in the greenback after FOMC officials talked down the recent bouts of higher inflation, reiterating once again that occasional bouts of strength in consumer prices are seen as transitory.

While US yields mainly trade within a rangebound theme, the greenback takes the brunt of those comments and drags the US Dollar Index (DXY) to new 3-month lows in the sub-90.00 region.

In the docket, the second revision of Q1 GDP in the broader Euroland showed the economy is expected to contract 0.6% inter-quarter and 1.8% over the last twelve months. Further data saw the trade surplus shrinking to €15.8 billion in March.

In the US data space, Housing Starts contracted 9.5% from a month earlier in April and Building Permits expanded 0.3% MoM.

EUR/JPY relevant levels

So far, the cross is gaining 0.31% at 133.06 and a surpass of 133.17 (2021 high May 18) would pave the way for a test of 133.48 (monthly high Apr.2018) and then 134.00 (round level). On the downside, the next support at 131.64 (weekly low May 12) seconded by 130.98 (monthly low May 5) and finally 130.53 (50-day SMA).