Valeria Bednarik, chief analyst at FXStreet explained that a weaker Japanese yen pushed the EUR/JPY pair higher at the beginning of the day, while poor US data helped it reach a daily high of 127.04.
"Investors sell the safe-haven currency on speculation that PM Abe will announce a fiscal stimulus plan and delay the increase of the sales tax, given latest inflation figures, well below the Central Bank´s 2.0% target.
The short term picture for the EUR/JPY pair is positive, given that the price rallied above its 100 and 200 SMAs in the 1 hour chart, with the shortest having advanced above the largest at the b eginning of the day, and currently around 126.05.
However, the price remains below this March high at 127.28, the level to beat to present a more constructive outlook. In the 4 hours chart, the technical indicators have lost their upward strength, but hold within positive territory, while the 100 SMA has crossed above the 200 SMA below the current level for the first time since early February, indicating a limited downward potential at the time being."