EUR/JPY Weekly Outlook

EUR/JPY's rally from 151.71 extended further last week as expected to as high as 169.46, taking out record high of 168.93 marginally and briefly. Though, Friday's retreat indicates that an intraday top should be in place. Initial bias is neutral this week and further pull back could be seen. But downside should be contained by 165.27/31 cluster support (38.2% retracement of 158.60 to 169.46 at 165.31 and 38.2% retacement of 151.71 to 169.46 at 165.27) and bring rally resumption. Above 169.46 will bring rise to 170 psychological resistance first.

In the bigger picture, EUR/JPY's break of 168.93 key medium term resistance indicates multi month consolidation should have completed. Sustained trading above this level will confirm that the long term up trend from 88.97 (00 low) has resumed and set the stage for further rise to next important cluster resistance at 188.22 (50% retracement of 285.56 (79 high) to 88.97 (00 low) at 187.26).

On the downside, break of 158.60 support is needed to indicate that rise from 151.71 has completed. Otherwise, further rally is still expected even in case of a deep pull back. However, in such case, it will open up a few short term bearish possibilities which could all lead to a retest of 151.71/149.27 support zone.

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