EUR/JPY is pulling higher from a recent 127.94 low, as momentum brings the cross higher and over the 50-day moving average (DMA) at 129.92. Technically, there are a few factors that support the bounce higher from 127.94, Benjamin Wong, Strategist at DBS Bank, reports.
EUR/JPY outlook stays robust
“The moving average convergence divergence (MACD) signal has cranked up a positive signal. EUR/JPY has generally respected the 200-DMA (currently at 129.44) support since June 2020, hence the recent short-lived blip lower in general dealt a blow to a flawed and negated head-and-shoulders top signal. Pertinent to bulls, EUR/JPY continues to respect two prior resistances turn support pods at 127.08-127.46.”
“EUR/JPY is sensitive to the direction EUR long-term deposit rates embrace. The 10-year EUR deposit rates rebounded nicely from prior turning points, and this has worked well in the cross’ recent bounce higher from the 127.94 lows.”
“Seasonality studies for EUR/JPY typically show weak August months, but they tend to slowly break out to stronger months that stretch all the way to December. This should underpin the cross, unless it makes a determined decline under the weekly Ichimoku support, pegged at 127.01, in coming sessions. The cross would stay robust.”