EUR/JPY hovering above 124.00 after failure at 125 resistance area

• EUR/JPY remains steady near eight-week highs after retreating from 125.00.
• The Japanese yen suffers in a risk-on market.
• A retest of 125.00 area remains on the cards.

The euro was rejected on Monday at the 125.00 psychological level and retreated to session lows at 124.00 Tuesday, where the pair found support to consolidate around 124.50, little changed on the day.

Risk appetite puts the yen on the defensive

The common currency has remained trading sideways on Tuesday, consolidating gains after having rallied more than 1.7% over the previous two trading days, to test eight-week highs at 125.00.

Biden’s victory in the US elections and Monday’s news about the encouraging results about Pfizer’s COVid -19 vaccine have boosted appetite for risk, undermining demand for safe currencies like the yen

The market, however, has been broadly flat on Tuesday, digesting the news from a potential coronavirus cure and assessing details and production to determine when will the vaccine be fully available.

EUR/JPY likely to retest 125.00

The sentiment is broadly positive and the pair remains at a short distance of 125.00 (October 9 and 19 highs). A successful break above here would shift the focus towards 126.40 (September 10 high) and 127.05 (September 1 high).

On the downside, immediate support remains at 124.00 area (Intra-day low and 50-day SMA). Below here, the pair would start looking towards 123.15 (November 5 high) and 122.20 (November 5, 6 lows).

Technical levels to watch