EUR/JPY is quite a popular cross, and now it could provide a big opportunity for various technical reasons. Here are two opinions:
Here is their view, courtesy of eFXnews:
EUR/JPY: L-Term Triangle Points To 140 In 1H2018; What’s The Trade? – BofAML
Bank of America Merrill Lynch Technical FX Strategy Research notes that EUR/JPY price action since the financial crisis in 2008 is forming a massive triangle formation and this would suggest EUR/JPY could see 140 in 1H18.
“This year, EUR/JPY has bullishly rallied though all of the monthly moving averages and the MACD indicator is crossing positive.
We think a 4Q correction to about 128 could be buyable,” BofAML advises.
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EUR/JPY: Eyeing The 27-Year Trend Resistance At 141 L-Term – SocGen
Societe Generale Cross Asset Strategy Research maintains a structural bullish view on EUR/JPY noticing that a 10% move higher in the cross would take it back to 2007 and 2014 levels in real terms.
“Yield differentials are steadily moving in the euro’s favour and that trend will continue as long as the BOJ keeps JGB yields depressed. EUR/JPY ‘fair value’ is around 137, so there’s a bit further to go on that basis, but that big differentiator is that the ECB is minded to begin policy normalisation much earlier than the BOJ.
Looking at the charts, SocGen notes EUR/JPY accelerated the up move last June after successfully breaching above the up sloping channel and the multi-year level at 127.50/126.
“The pair has met a first significant projection at 134.40, the 61.8% retracement of the 2014 to 2016 correction whilst short-dated momentum indicators are exhibiting overbought signals. Thus, a short-term pullback seems looming.
The up move is set to resume eventually towards 137/137.50 and 141.00, the 76.4% retracement and more importantly the trend line resistance in force since 1980. This will remain a prominent hurdle,” SocGen projects.
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