EUR/JPY stayed in tight range below 125.09 last week and initial bias stays neutral this week first. But based on overall development in yen crosses, EUR/JPY’s rebound from 118.62 will likely turn out to be stronger than expected. On the upside, break of 125.09 will bring further rise to 55 day EMA (now at 126.75) and above. On the downside, break of 123.40 minor support will turn bias back to the downside for retesting 118.62 low instead.
In the bigger picture, medium term rebound from 109.03 (2016 low) has completed at 137.49 already, with corrective structure. Fall from 137.39 is possibly just the second leg of the corrective pattern from 109.03. Break of 133.12 resistance should start the third leg to 137.49 and above. Nevertheless, break of 118.62 will resume the down trend from 137.49 for 109.03/114.84 support zone instead.
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.