- The EUR/JPY is registering gains of 2.22% in the week after facing solid resistance around 143.60.
- EUR/JPY Price Analysis: In consolidation within a 130 pip range circa the 143.00 psychological barriers.
The EUR/JPY hit a fresh weekly high at 143.67 but reversed some of those gains, resting comfortably above Thursday’s high ahead of the weekend. Therefore, the EUR/JPY exchanges hands at 143.40 after dropping to a low of 142.91.
EUR/JPY began the week at around the 200-day Exponential Moving Average (EMA) at 140.32 before rallying sharply towards the 142.38 Tuesday high. Since that day, the EUR/JPY consolidated at around the 142.35-143.65 area, unable to crack either side of the range.
On Friday, the EUR/JPY pierced the top of the range, but buyers unable to hold to its gains, caused a retracement in the pair. Therefore, the EUR/JPY neutral-to-upward bias remains intact.
If the EUR/JPY breaks the top of the range, the next supply area will be 144.00. Once broken, the EUR/JPY might rally and test a five-month-old downslope resistance trendline passing nearby 144.50/60. That could propel EUR/JPY bulls toward the psychological 145.00 barrier.
Contrarily a EUR/JPY fall below 142.30, and the pair might test the 142.00 figure. A breach of the latter will open the door for a move lower to the 141.70/80 area, with the 20, 50, and 100-day EMAs resting inside the range, followed by a fall to the 200*day EMA at 140.44.
EUR/JPY Daily chart
EUR/JPY Key technical levels
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The EUR/JPY currency pair opened the trading session on Monday at 143.60, and subsequently fell to a mild trough of 143.40. While the downside has remained in check so far, bulls are hesitantly preparing for the next assault towards testing the 145.00 psychological resistance in the near future.
In the bigger picture, the pair is clearly striving hard to break from the confines of the recent range of 141.30 – 144.80. A decisive victorious breach of the upper band of the range will likely open doors for trading to heights not seen since late-March at least, given the prevailing bullish scenario. Conversely, an eventual breakdown below the range would only be a sign of an imminent shift in the broader trend and demand for caution from traders to guard their positions.
In terms of economic data, a slightly softer than expected German inflation report could be weighing on the shared currency, however, the same could be offset by investor risk appetites, given the recent spike in virus cases across various European countries. Any confirmation of an economic rebound could no doubt keep the sentiment in the EUR/JPY pair buoyed.
From the technical perspective, the US Dollar Index (DXY) is seen struggling to hold onto the crucial 92.00 level and is slowly inching lower, which could give EUR/JPY an additional boost higher. On the downside, immediate support is seen at 142.80 and 142.30/20, while resistance lies at 143.60 and 143.95/00.
Overall, while the immediate bias is seen tilted to the downside, EUR/JPY is likely to soon rally towards testing the 145.00 handle, barring a massive shift in the global risk environment. Traders are therefore advised to monitor the DXY, ahead of the important PMIs due later in the week, for additional cues.