EUR/JPY stayed in range of 124.17/125.95 last week and outlook is unchanged. Initial remains neutral this week first. At this point, we’re favoring the case that rebound from 118.62 has completed at 125.95 already, just ahead of 55 day EMA. On the downside, break of 123.78 will add more credence to this case and target a test on 118.62 low. On the upside, however, decisive break of 125.95 will dampen our bearish view and target 129.25 resistance next.
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.
