- Oversold RSI triggered the EUR/JPY pair’s pullback amid the JPY weakness on Abe’s comments and the EUR recovery.
- Brexit, EU’s stand over the UK-Iran tussle and Kuroda’s speech will be the key to watch.
With the recent surge in the Euro (EUR) buying interest and the Japanese Yen’s (JPY) weakness, the EUR/JPY is taking the bids to the 121.12 ahead of the European markets open on Monday.
The EUR seems to have benefited from the US Dollar (USD) weakness and likely positive outcome of the EU policymakers’ Brexit efforts. Also adding to the regional currency’s strength could be its readiness to help the UK over a tussle with Iran. Traders still await this week’s European Central Bank (ECB) meeting details for near-term direction.
On the other hand, the JPY remains on a back foot as the Japanese Prime Minister (PM) Shinzo Abe reiterated his support for October tax hike despite knowing downside risks of the measure. Mr. Abe gained the majority seat in Japan’s upper house election today and hence is capable enough to enforce the policies.
Moving on, Bank of Japan (BOJ) Governor Haruhiko Kuroda is scheduled to speak while German Buba Monthly Report will also flash lights on the economic strength of the bloc’s growth engine.
FXStreet Analyst, Ross J. Burland, spots the pair’s sustained trading below 55-day ma and the 3-month downtrend to portrays the bears’ command over the momentum:
Bears are lining up for a run to a 119.91 longer-term range 78.6% Fibonacci retracement ahead of 117.85 as the January spike low. A break out of the channel and above the 200-hour moving average that has a confluence with the 50% Fibo of same hourly short term rage opens a run to 122 handle and the 78.6% before the swing high top at 122.30. Above there we have the May 21, June and current July highs.