EURJPY On Watch

Price action in EURJPY is looking interesting to the long-side here. Following the reversal lower from the failure at 143.80, price has since traded back down to test the 137.74 level and the rising trend line from YTD lows. Yesterday’s reversal saw a bullish pin bar form at what might prove to be the right shoulder of a large inverse head and shoulders pattern, suggesting room for a continuation of the longer-term bull trend. Bulls can look to trade a break of the 140.82 level targeting 143.80 initially and 149.83 as a longer-term target. Retail market currently around 60% short so there is plenty of room for this to build if we start moving higher.

Keep an Eye On

The lack of follow through on the BOJ intervention last week suggests the market doesn’t buy into the central bank’s ability to keep JPY propped up while also maintaining negative rates. Near-term, risk flows likely more important. If we see any pull-back in USD this week, that would be helpful for risk markets, helping driver the pair higher. However, if risk sentiment deteriorates again, JPY likely to gain against EUR negating the bullish outlook here. One to watch.