• The euro appreciates 1.5% on the day and approaches 130.00.
• Risk appetite and higher US yieldhs are crushing the yen.
• EUR/JPY aiming to test 129.80 resistance area.

The euro opened the week on a solid tone against the Japanese yen. The pair is rallying nearly 1.5% son far today on the back of a somewhat brighter market sentiment.

Risk appetite and higher US yields crush the JPY

The euro has extended the sharp recovery seen last week, with the pair bouncing from 124.35 lows, favoured by a broad-based JPY weakness.

A moderate improvement on market sentiment, after representatives from Ukraine and Russia hinted to some progress on the peace talks over the weekend, has buoyed stock markets on Monday, weighing on safe-havens like the yen.

Furthermore, US Treasury Bonds have rallied further, with the benchmark 10-year yield reaching nearly three-year highs at 2,1%, ahead of the Federal Reserve’s monetary policy meeting, due on Wednesday. With the Bank of Japan expected to maintain its ultra-expansive policy for the foreseeable future, the increasing interest rate differencial has pulled the yen to five-year lows against the greenback.

EUR/JPY aiming to test Fibinacci resistance at 129.80

From a technical point of view, the pair has confirmed above the trendline resistance from February 10 high -now around 128.00, with the pair eyeing 61.8% Fibonacci retracement of the February-March decline, at 129.80.

Above here, next potential targets would be 130.25 (February 25 and 28 highs) and 130.70 (February 28 high)

On the downside, a potential correction would look for support at 128.80 (March 2, 10 highs) before testing the mentioned trendline around 128.00 and 127.40 (March 10 low).

EUR/JPY daily chart