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EUR/JPY: bulls attacking the bears commitments guarding the 131 handle

5/18/2018, 10:59:31 AMBasics of Trading
EUR/JPY: bulls attacking the bears commitments guarding the 131 handle

EUR/JPY is ticking higher as the Tokyo session is underway. The yen is on the backfoot with risk elevated today on positive headlines around trade talks between China and the US and after the Japanese CPI data miss. 

EUR/JPY is currently trading at 130.88 and has exceeded the previous session high of 130.84. USD/JPY is also making similar moves with bulls looking for a test of the 111 handle in Asia today. 

EUR/USD downside could be overdone

However, the question is whether EUR/USD's downside is overdone and that will be key in the crosses ability to rally or not. The heavy net selling for this week could be indicating that the long liquidation trade may be nearing a climax. The dollar, however, remains well bid with US yields firmly on the 3% handle. 

Funda-FX wrap: geopolitical matters lacking signs of traction

EUR/JPY levels

EUR/JPY has come under pressure, 131.25/28 caps, targets 128.96 - Commerzbank

Analysts at Commerzbank explained that rallies have been unable to clear initial resistance at 131.25/28 (20 and 55 day ma) and while capped here the market will remain offered.

However. Hourly RSI supports the upside bias for a test of the 131 handle in the interim with room to 131.15/20 to complete the 15th May downside reversal with support from the 100-he SMA at 130.66.