Valeria Bednarik, chief analyst at FXStreet explained that the EUR/JPY pair extended its rally beyond the 128.00 level and holds above the critical level ahead of Friday's Asian opening, with increasing EUR demand taking the pair to its highest in 7 weeks.
"The pair has now risen for sixth day in-a-row, which means there's the risk of downward corrective movement this Friday', regardless the currencies' self strength/weakness.
Now standing a few pips below its 100 DMA currently at 128.40, the short term technical picture keeps favoring the upside, as in the 1 hour chart, the price is well above its moving average, with the 100 SMA having widened the distance with the 200 SMA, far below, indicating bulls remain in the driver's seat, whilst the Momentum indicator keeps heading north, despite being in overbought territory.
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In the 4 hours chart, however, the technical indicators continue to present bearish divergences, as the Momentum indicator posts lower highs whilst the price posts higher ones. Should the price break above the mentioned 128.40, the upward momentum will likely prevail, and the pair will be on its route to 130.00 early next week."