EUR/JPY rally not enough yet

EUR/JPY rally not enough yet
FXStreet (Guatemala) – EUR/JPY is currently trading at 135.23 with a high of 135.63 and a low of 134.84.

Despite this minor recovery from below the 135 handle, EUR/JPY remains contained by descending resistance from the 12th July bearish gap’s recovery up to 137.80, although the rally yesterday to 135.76 was encouraging for the bulls. Supply has taken the cross back to the downside and is testing the 135/10 supporting area currently. USD/JPY is recovering back from yesterday’s down day which is supporting the cross on the back on the bid although is also making a good advance vs the single currency that has dropped back from yesterday’s rally to 1.0960’s from the depths of 1.08.

Fundamentally, we await another round of Greek parliament today, who are voting on a second set of new legislation demanded by the country’s creditors before the EU can get down to what matters and define the third bailout package for Greece. Meanwhile, it has been reported that the ECB would back a EUR900m ELA hike.

Else where, the Greek government has refuted the rumours of a September snap election and the Japanese government have lowered their CPI forecast to 0.6% in 2015 where the previous was 1.4% and 1.6% in 2016 where the previous was 1.8%. Overnight, the Nikkei had been tracking the weakness of Wall Street and the Yen was offered in a risk-off tone.

EUR/JPY neutral bias

Technically, the bulls are lurking in the shadows despite the bearish trend that developed at 141.00 in June and one that has been in place since 149.85 in Dec 2014. April’s recovery to 140.00 remains in form while the cross is above 132.90/30 and above the neck line of the head and shoulders formation at the top of the rally. However, the recent sell of down to the 3 month uptrend at 134.35 was encouraging for the bears ahead of 133.57 target. To the upside, Karen Jones, chief analyst at Commerzbank explained, “Given the robust rebound recently from the 133.10/57 support (Fibo and May low), we suspect that the 137.10 200 day ma will come under further attack. A break above here will introduce scope to the 140.70/141.06 recent highs, which is again expected to act as tough resistance for the market.
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EUR/JPY rally not enough yet
Source: FXStreet