EURJPY has been moving sideways since the start of the month, as price found support at the 139.00 major psychological level and resistance near 141.00. The pair is moving up to test the top of the range and may bounce from resistance since stochastic is starting to move down from the overbought area.
RSI, on the other hand, is hinting at a potential move higher since the oscillator is still moving up. This could lead to an actual test of the range resistance or a potential upside break. If that happens, the pair could climb by an additional 200 pips, which is the same height as the rectangle pattern.
The moving averages also support a continuation of the longer-term uptrend, as the short-term 100 SMA is treading above the long-term 200 SMA. Price also seems to be treating the 100 SMA as a dynamic support level.
Event risks for this setup include any updates on the Greek debt talks, as positive developments could continue to keep the shared currency supported. French and Italian industrial production numbers are up for release today and another set of strong readings could also give the euro a boost.
As for the Japanese yen, the economy printed a stronger than expected core machinery orders report earlier today. The actual figure came in at 3.8% versus the projected 2.0% decline and stronger than the previous 2.9% figure, which might also keep the yen supported. In addition, risk sentiment could play a key role in price action of the yen pairs.
By Kate Curtis from Trader’s Way