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Forex: EUR/JPY jump stalls at 130.35/40 weekly highs

FXstreet.com (Barcelona) - Once again, the EUR/JPY failed to extend the upside above 130.35/40 area following the unexpected 2.2% growth in factory orders, instead of the predicted -0.5% contraction. Since May 3 that the cross has been attempting at advancing through the chart up to 131.13, April 11 high, but the 130.35/40 zone has been stalling repeatedly.

German factory orders figures came in up by 2.2% in March, instead of contracting -0.5% as expected. February data was revised slightly lower from 2.3% to 2.2%. German factory orders in year-on-year basis dropped further, from -0.2% (revised from 0.0%) to -0.4%, but that came in better than the -2.9% expected. Details showed broad-based gains from the domestic side (+1.8%), as well as exports (ex-Germany EZ orders +4.2% and non-EZ orders +1.9%). Earlier, the French industrial output not only contracted as predicted, but fell by -0.9% instead of the market consensus of -0.3%.

Portugal is selling 10-year debt for the first time since the bailout. Initial target was at €3B with targeted yield around 5.6% (higher than the yield at the secondary market of 5,464%), but demand is up to €4B.

European Commissioner Olli Rehn said that tackling funding problems in Europe is the next challenge and IMF’s Lagarde said that central bankers must find out why banks are not lending.

UBS analysts are bullish: “Resistance is at 131.12, a break above which would open 132.05 and then 134.38”, wrote analysts Bijoy Kar and Luc Luyet, pointing to support at 127.06.

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