EURJPY is trading with weak directional bias over the last three weeks, while spiking towards the 18-month high of 127.10. The momentum indicators are pointing to a neutral to negative bias in the short term with the RSI just below the 70 suggesting a possible pullback and the MACD is holding below its trigger line in the positive region.
In the event of an upside move, the 127.10 resistance could act as a barrier before being able to challenge the 127.50 level, taken from the high in February 2019. A break above this level would shift the medium-term outlook to a bullish one as it could take the pair towards 129.30, achieved in December 2018.
On the other hand, the 20-day simple moving average (SMA) at 125.70 is acting as a major support ahead of the 125.07 line. A drop below that would shift the structure to neutral, hitting the 40- and 100-day SMAs currently around 124.50, ahead of the 23.6% Fibonacci retracement level of the up leg from 114.40 to 127.10 at 124.07. Even lower, the next hurdle could be at the 38.2% Fibonacci of 122.21.
To sum up, EURJPY is consolidating in the very short-term, while in the bigger picture the outlook has been neutral since July 14.
