EURJPY has overcome the three-month high of 132.15, recorded after the price soared in response to ECB President Lagarde’s surprise hawkish tone at the last week’s meeting as the governing council reiterated concern about high inflation data. The positive incline in the longer-term 100- and 200-period simple moving averages (SMAs) and the bullish crossover of them by the climbing 50-period SMA, are together endorsing the bullish mood in the pair.
The Ichimoku lines are implying that bullish forces have powered up, while the short-term oscillators are reflecting that the pair has resuscitated its positive drive. The MACD, in the positive zone, has gained an incline back near to its red signal line. The RSI, which was fluctuating a tad underneath the 70 level, is making efforts to overstep the 70 overbought line. Moreover, the stochastic oscillator’s positive charge has amplified, reflecting additional bullish developments.
If the current trajectory persists, prompt resistance could emanate from the 132.56 high, identified at the beginning of November 2021, ahead of the 132.66-132.91 resistance band formed by the peaks from the second part of October 2021. Conquering this barrier may boost confidence in the pair, encouraging the bulls to propel for the four-month peaks of 133.36 and 133.47 from mid-October 2021, before challenging the 133.58-133.75 resistance barricade stretching back to June 2021.
On the other hand, if fresh impetus fades and the price falls back beneath the 132.15 barrier (previous resistance-now-support), the Ichimoku lines at 132.00 and 131.82 could provide preliminary downside friction ahead of the 131.62 and 131.47 congested lows. Not much lower, the 131.00-131.25 support border that overlaps with the Ichimoku cloud’s upper band may prove to be more difficult to dip by. However, if a deeper retracement unfolds, sellers may then meet the 50-period SMA at 130.74 before diving towards the cloud’s surface at 130.24, where the 200-period SMA also currently resides.
Summarizing, EURJPY’s bullish bias is strengthening with the price surging above the 3-month high of 132.15. To begin to dent the bullish bias, sellers would initially have to drive the price below the 131.25 trough. That said, the bullish bias remains intact above the 131.00-131.25 base and the SMAs.
Note, one important thing traders need to keep in mind is today’s important US inflation data. Expectations are that the figures will be elevated, which may see EURJPY take a hit.
