Earlier, we wrote that the euro was showing relative strength across the board today. Although the EUR/USD’s rally faltered as the stronger US GDP data underpinned the dollar, other euro crosses remained generally supported in this first half of the North American session. One interesting euro pair to watch for further developments in the Asian session overnight is the risk-sensitive EUR/JPY pair, which has rallied along with equity prices.

As a result of today’s rally, the EUR/JPY’s near-term technical picture has turned more bullish. Here are some key technical observations for this pair:

  • Moved further above the 2018 low of 124.62 (bullish)
  • New high for the year at 126.90 today (bullish)
  • Poked above January’s bullish hammer monthly candle at 126.74 (bullish)
  • Long-term lower highs still intact (bearish)
  • Still below 200-day moving average (bearish)
  • 200-day motiving average slope negative (bearish)

Key short-term potential support levels:

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  • 126.30ish – old resistance pre-breakout
  • 125.70ish – point of origin of bullish breakout on H1 time frame

Key short-term potential resistance levels

  • 127.20/25 – last daily support pre-breakdown
  • 128.00/15 – 50% retracement and 200-day average confluence

Overall, price action still looks bullish on the EUR/JPY and we continue to expect the dips to be supported and resistances to give way. This bullish technical directional bias would remain valid until such a time that price breaks a prior low or forms a distinct reversal pattern at higher levels first.

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