EUR/JPY hits fresh yearly highs above 172.60 amid a brighter market mood 

• The Euro extends gains to fresh one-year lows, but technical indicators are showing signs of exhaustion
• A brighter market mood after the upbeat Chinese GDP data is weighing on the safe-haven Yen.
• In Europe, hopes of a trade deal with the US keep the Euro buoyed.

The Euro appreciated for the third consecutive day on Tuesday, to reach levels above 172.60 for the first time since July last year, with the safe-haven Yen weighed by a somewhat brighter market mood on Tuesday.

The pair, however, is starting to look overstretched in most timeframes, following a nearly 7% rally from late May lows and a more than 10% appreciation since late February. The 4-hour RSI is showing a bearish divergence, a sign often anticipating significant corrections.

Positive data from China and hopes of a EU-US deal are fuelling the EUR/JPY rally

In the macroeconomic front, China's upbeat GDP and Industrial Production figures seen earlier today have improved investors' confidence in the strength of the world's second-largest economy and eased concerns about the impact of Trump's tariffs on the global growth outlook.

These views have undermined support for the safe haven Japanese Yen, which is one of the worst G8 performers on Tuesday.

In the Eurozone, the ongoing trade talks between EU and US representatives, and the positive comments from the European side, are feeding hopes that the 30% levy announced by President Trump over the weekend can still be avoided. This feeling is contributing to buoy the Euro against its main peers on Tuesday.