EUR/JPY hits fresh 2-year highs, still unable to break above 135.00

• EUR/JPY retreats after approaching 135.00. 
• Euro weakens as EUR/USD gets rejected from above 1.1900. 

The EUR/JPY pair pulled back after moving closer to the 135.00 handle. The euro reached at 134.96, the highest level since October 2015 and then pulled back modestly. 

As of writing it was trading at 134.70/80, up 50 pips for the day. The short-term tone favors the upside, but it will likely remain limited as long as it holds below 135.00. 

Today’s up move was supported by a rally in EUR/USD while USD/JPY remained steady despite lower US bond yields. Volume continues to be low, as it usually happens during the last week of the year. 

EUR/JPY is about to end the year with a 10% gain after falling during the previous three years. 

Technical perspective 

The pair is holding above a relevant short-term technical zone that is the 134.30/50 area. If the euro remains above, it is likely to extend its gains over the medium term, particularly if it climbs and holds above 135.00 during the next sessions as it would confirm the breakout of a trading range that prevailed during the last weeks. 

The bullish tone is likely to prevail as long as the pair holds on top of 132.20, the 20-week moving average that protects the lower bottom of the current range at  131.40.