EUR/JPY Reclaims 124.00 Handle

EUR/JPY Reclaims 124.00 Handle

10 May 2016, 10:10
Roberto Jacobs
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EUR/JPY Reclaims 124.00 Handle

Global risk-on sentiment continues to drag JPY lower against most major currencies, with the EUR/JPY pair extending its recovery from 122.00 handle to move back above 124.00 mark.

Monday rally was triggered on comments from Japan's finance minister Taro Aso, who made a direct reference to the possibilities of a intervention in the Forex market should the Japanese Yen starts appreciating again. Aso stated that the ministry was prepared to curb access volatility and sharp appreciation of Japanese currency, which has now turned a major concern for policy makers on declining competitiveness of country's exports.

The pair has now comfortably trading above its short-term moving averages (10, 20-day SMAs) but is now close to its immediate resistance near 124.00-124.15 area, marking 23.6% Fibonacci retracement level of 132.30-121.68 down-slide. A clear break through above this immediate resistance opens room for further appreciation for the pair in the near-term.

Technical levels to watch

Above 124.00 handle resistance, the pair could immediately aim towards testing 50-day SMA resistance, near 124.75-80 region, which if conquered has the potential to further boost the pair, beyond 125.00 psychological mark resistance, towards its next major resistance near 125.60-70 area (38.2% Fibonacci retracement level).

On the flip side, weakness below 123.80-65 horizontal area seems to find support at day's through level near 123.30-25 region. Slide below intraday lows could be limited at 122.85 support but any subsequent weakness below 122.85 would negate prospects of any further recovery, dragging the pair back below 122.00 handle, towards retesting its recent lows support near 121.70-65 area.


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