EUR/JPY bounces off multi-month lows near 127.50

• EUR/JPY bottomed out near 127.50 on Monday.
• The dollar regains ground and puts the cross under pressure.
• Fed’s Chair J.Powell speaks later in the NA session.

The recovery in the greenback keeps the euro under pressure and dragged EUR/JPY to fresh 9-month lows near 127.50 at the beginning of the week.

EUR/JPY struggles for direction, looks to risk trends

EUR/JPY attempts to leave behind three consecutive daily pullbacks amidst the rebound in the sentiment surrounding the greenback, higher US yields and rising cautiousness around the progress of the omicron variant.

Indeed, the US dollar regains the upside momentum and leaves behind part of Friday’s strong retracement, always helped by the pick-up in yields and the soft stance in the risk complex.

Earlier in the docket, the German flash inflation figures showed the CPI is seen contracting at a monthly 0.2% and rising 5.2% from a year earlier. In addition, the final Consumer Confidence in the euro area came in at -6.8 in November, matching the preliminary reading.

Across the Atlantic, Pending Home Sales and speeches by Powell, Clarida, Williams and Bowman should keep investors entertained later in the NA session.

EUR/JPY relevant levels

So far, the cross is gaining 0.02% at 128.27 and a surpass of 129.59 (weekly high Nov.23) would expose 130.01 (100-day SMA) and then 130.54 (200-day SMA). On the downside, the next support comes at 127.48 (monthly low Nov.29) followed by 126.00 (round level) and finally 125.08 (2021 low Jan.18).