EURJPY has stabilized somewhat since early June, trading within a narrow range with an upper bound of 123.20 and a lower bound of 120.80, which keeps the near-term bias neutral for now. A break on either side is needed to determine the short-term direction. In the bigger picture however, the pair is still in a downtrend.
Momentum oscillators paint a flat picture too, with the RSI being just below its 50 line and the MACD slightly above its red trigger line.
Another wave lower could stall initially at 120.80, where a downside break could reaffirm the continuation of the broader downside trend and open the door for a test of 119.30 – an area marked by the low of February 7, 2017.
On the other hand, if the bulls retake the reins and manage to pierce above 122.50, attention would turn to the 50-day simple moving average (SMA) at 122.99 and the 123.20 zone. Another move above that territory would turn the medium-term picture to a more neutral one too, with the next obstacle being the 125.30 region.
In brief, the short-term picture seems neutral as long as the pair trades between 123.20 and 120.80, though the medium-term outlook is still negative.
