The EUR/JPY pair edged higher as the Japanese Yen was punished by the Japanese Yen Futures' drop. It was traded at 138.66 at the time of writing and it seems determined to approach and reach new highs.
Still, after its amazing rally, we cannot exclude a temporary retreat. It could test and retest the near-term downside obstacles before jumping higher. Surprisingly or not, the JPY depreciated even if the Tokyo Core CPI reported a 2.6% growth versus the 2.5% expected on Friday. On the other hand, the Eurozone data came in mixed in the last trading session.
Tomorrow, the Japanese Unemployment Rate is expected to remain steady at 2.6%, while the German Prelim CPI could report a 0.2% growth.
EUR/JPY Strong Rally!
As you can see on the H1 chart, the pair registered only false breakdowns below the uptrend line. Today, it has managed to take out a pass above the minor downtrend line and above the 138.39 former high which represented upside obstacles.
As I've said earlier, after its strong rally, the EUR/JPY pair could come back to test and retest 138.39 or the weekly R1 (138.13) before resuming its growth.
EUR/JPY Forecast!
The major downtrend line represents a critical dynamic resistance. Consolidating above 138.39 may announce an imminent breakout through the downtrend line and above the R2 (139.27).
Jumping, closing, and stabilizing above these obstacles may announce an upside continuation and could bring long opportunities.
