EUR/JPY: in a tight range on 132 handle as rate spreads dominate the flows

Currently, EUR/JPY is trading at 132.03, down -0.23% on the day, having posted a daily high at 132.40 and low at 131.84.

EUR/JPY has been confined to a tight range in the US session, consolidating within the cluster of hourly MAs after recovering from the slide from 132.37 to 131.84. Meanwhile, the euro, trading below the 1.18 handle vs the greenback, is still liable to feel some “heat” from wider rate spreads with Eurozone-US 2Y spreads reaching a new high (-226bps, with widest yield premium for the USD since the 1990s), keeping a lid on the correction in the euro. 

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In respect to data, the final Eurozone CPI was unchanged from the preliminary report of a 0.4% gain in the Sep month (+1.5% in the year). 

"Germany reported a slightly weaker ZEW survey for Oct (87.0 versus 88.5 expected and 87.9 in the prior release) but the survey remains at elevated levels from an historic perspective and suggests the German economy retains solid upward momentum heading into the tail end of the year," explained analysts at Scotiabank.  

EUR/JPY levels

Analysts at Commerzbank explained that the EUR/JPY is drifting back towards the 55-day moving average at 131.19. "Should it be slipped through, the mid-September low at 130.64 would be in focus. Below it lies the September low at 129.40 and the August low at 127.57. Immediate downside pressure will be maintained while the cross continues to trade below the current October high at 133.50," the analysts added.