EURJPY previously broke past the resistance at the 132.50 to 133.00 levels then zoomed up to a high of 133.46.

Price has since pulled back to the broken resistance and the Fib tool on the latest swing low and high on the 1-hour time frame shows that the 38.2% level lines up with the area of interest. 

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which means that the rally is more likely to continue than to reverse. The 100 SMA is also close to the 50% Fib, which might also hold as support in a deeper pullback, while the 200 SMA is slightly above the 61.8% Fib at 132.50. 

Stochastic is pulling up from oversold levels to indicate a return in bullish momentum that might take EURJPY up to the swing high or higher. However, a break below the Fibs or moving averages could force it down to the swing low near 132.00 or lower. 

The euro got a bit of a boost from ECB official Coeure’s warning on how prolonging the asset purchase program could pose risks to financial stability. However, the shared currency gave up some of those gains when Governor Draghi lauded the central bank’s negative interest rates and QE efforts. 

Economic reports from the euro zone turned out mixed as industrial production beat expectations with a 1.4% gain versus the estimated 0..6% increase while the French final CPI was downgraded to show a larger 0.2% downtick from the earlier 0.1% dip.

Data from Japan was also mixed as PPI came in line with expectations of a 0.1% gain while the tertiary industry activity index surprised to the downside with a 0.2% drop versus the estimated 0.1% uptick. There are no reports due from Japan today while the euro zone has the German final CPI lined up. 

By Kate Curtis from Trader’s Way