EUR/JPY edged higher to 125.95 last week but gyrated down afterwards. Break of 124.36 suggests that rebound from 118.62 has completed just ahead of 55 day EMA . Initial bias is mildly on the downside this week for 123.78 support first. Break there will add more credence to this case and target a test on 118.62 low. On the upside, break of 125.95 resistance is needed to confirm resumption of the rebound. Otherwise, risk will now stay on the downside in case of recovery.
In the bigger picture, medium term rebound from 109.03 (2016 low) has completed at 137.49 already, with corrective structure. Fall from 137.49 is likely still in progress. Decisive break of 118.62 will target 161.8% projection of 137.49 to 124.61 from 133.12 at 112.28, which is inside 109.03/114.84 support zone.
In the long term picture, EUR/JPY is staying in long term sideway pattern, established since 2000. Fall from 137.49 is seen as a falling leg inside the pattern. It could extend through 109.03 to resume the decline from 149.76 But in that case, we’d expect strong support around 94.11 (2012 low) to bring reversal.
