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The continuation of the ongoing rebound could see EUR/JPY testing the key short term resistance area in the 121.16/24 band, noted Karen Jones, Team Head FICC Technical Analysis at Commerzbank.

Key Quotes

EUR/JPY has sold off to its 4 month down channel at 117.38 and here we also find the 117.42 TD support, this has prompted a rebound and we would allow for a further recovery. Initial resistance is the 20 day ma at 119.82 and the 120.06 25th July low. Key short term resistance is the 55 day ma and the 3 month downtrend at 121.16/24. The market will need to regain this to reassert upside interest”.

“Support at 117.40 guards the 114.86 2017 low. The break lower last week saw the market erode a 2012-2019 support line and this leaves a negative bias entrenched while below the downtrend”.