EUR/JPY eyes a daily resistance on a firm euro

• EUR/JPY bulls are making progress towards key daily resistance. 
• The ECB is in focus as hawkish tones start to emerge supporting the single currency.

Most major currencies were little changed against the US dollar, with month-end flows making for a volatile session overnight.

EUR/USD roundtripped from 1.1800 to 1.1845 and back while USD/JPY fell to 109.59 then recovered to 110.00, resulting in a bid in the cross overall.

EUR/JPY rallied from a low of 129.58 to a high of 130.17.

The single currency picked up a bid following inflationary pressures reported in the Euro Area with the flash CPI estimate for August coming out hotter than expected, (3% vs 2.5% exp and 2.2% prior, the highest annual pace in a decade).

Core CPI also rose, to 1.6% YoY (est. 1.5% YoY, prior +0.7% YoY).

This was sinking the DXY due to the prospects of the convergence between the European Central Bank and the Federal Reserve. 

ECB’s Philip Lane was a key takeaway from the Jackson Hole, basically, promising to calibrate the QE program to financial conditions BOTH in an upwards and in a downwards direction.

''This topic may be up for discussion when it meets next week,'' analysts at ANZ Bank said.

''The recent improvement in economic data means the central bank may consider scaling back the magnitude of Pandemic Emergency Purchase Programme (PEPP) under which the bank is currently purchasing about EUR20bn of bonds each week.''

EUR/JPY technical analysis

The price is on the path to test resistance from a daily perspective that would be expected to see a rejection on initial attempts.