EURJPY recently broke past the 130.00 major psychological level and zoomed to a high of 131.60 before going for a correction. 

Applying the Fibonacci retracement tool shows that the 38.2% level lines up with the area of interest, adding to its strength as potential support. Stochastic is pulling up from the oversold area to signal that bullish momentum is returning. 

The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. Price also seems to be bouncing off the 200 SMA dynamic support but the gap between the moving averages is narrowing to suggest that a downward crossover may be due. 

Economic data from the euro zone came in mixed on Friday but the figures were mostly stronger than expected. The Spanish unemployment change and euro zone Sentix investor confidence index are lined up for today. 

However, risk sentiment could be the main driving force in the markets today as the missile launch tests in Korea could keep traders on the lookout for worsening geopolitical risks. If risk aversion stays in play, the yen could continue to advance against its higher-yielding peers.

Data from Japan was weaker than expected last week, with capital spending and final manufacturing PMI coming in below estimates. Consumer confidence also took a hit as the index dropped from 43.8 to 43.3. There are no reports due from Japan today.

By Kate Curtis from Trader’s Way