EUR/JPY Approaches the Upper Bound of a Range | Technical Analysis

EUR/JPY traded slightly higher today, after it hit support near the 125.35 level yesterday. Overall, the pair has been trading in a sideways manner between 124.20 and 125.95 since January 24th and thus, we will consider the near-term outlook to be neutral for now. We prefer to wait for a decisive break out of the range before we start examining the pair’s forthcoming directional path. That said, bearing in mind that the rate is now approaching the upper bound of the range, we see more chances for an upside exit rather a downside one.

If the bulls are strong enough to push EUR/JPY above 125.95, which is the range’s upper end, then we may see them initially aiming for the 126.45 barrier, marked by the high of December 31st. If that level fails to stop them and breaks, then we may experience extensions towards the highs of December 27th and 28th, near the 127.05 zone.

Turning our gaze at the short-term oscillators, we see that the RSI rebounded from near its 50 line and now points up. The MACD is positive, still below its trigger line, but shows signs that it could start bottoming as well. These indicators suggest that the rate is gathering some upside momentum and add to the chances of an upside exit out of the range.

Now in case the bulls give up and the rate falls below 125.35, this may be a signal that traders want to keep the pair within the range for a while more. Such a dip may result in a slide towards the 124.75 hurdle, marked by the low of February 19th, the break of which may allow a test at the lower boundary of the range, at around 124.20.

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The enlarged feel in the single currency keeps supporting the going on insulted in EUR/JPY, although the pardon expansion failed to fracture above the key 100-day SMA in the mid-126.00s for the era being.

The gnashing your teeth is tally to Monday’s gains again 126.00 the figure, happening for the second consecutive week and approximately abundantly recovering the throbbing sell off recorded into the lead March in the wake of the ECB meeting.

EUR/JPY, in the meantime, appears consolidative in the upper bound of the weekly range neighboring-door to the backdrop of extremely low volatility and rising cautiousness in spacious of the upcoming FOMC meeting in the region of Wednesday evening.

The upside upgrade in the fuming remains expertly supported by the generalized offered bias surrounding the Japanese safe waterfront, all amidst markets’ preference for riskier assets.

Later in the session, the German/EMU ZEW survey is neighboring re speaking tap ahead of the speech by ECBs P.Praet and EMUs Labour Cost Index. In the Japanese docket, the BoJ will publish its minutes from the last meeting going almost the subject of for Wednesday, although it is unlikely to have an effect on the dial re JPY.