Currently, EUR/JPY is trading at 134.14, up 0.50% on the day, having posted a daily high at 134.28 and low at 133.42.
EUR/JPY rallied hard in Europe after the BoJ overnight and UST/Bund 10-year spreads narrowed 4bp, completing outpricing the Fed move.
The 134 handle was tested before supply took the cross back to 133.70's in choppy sideways range price action. Then, the price ricocheted from the low 133.70's support area again in the NY handover in a decisive attempt for higher ground above the 134 handle to aforementioned highs.
Meanwhile, "the basic story of the German election has been told many times by now. Chancellor Angela Merkel has enjoyed a comfortable and stable lead in the polls for several months. It would need a miracle or wrong polling for her not to win the elections. The second place will most likely go Merkel’s primary challenger Martin Schulz and his SPD. The race for number three, however, still remains open.
Currently, the liberal FDP and the AfD seem to have the best chances to make it but also for the Greens and the Linke – even though currently slightly behind in the polls – position number three is still at an arm’s length," explained analysts at ING.
EUR/JPY levels
Analysts at Commerzbank explained that EUR/JPY has reached its initial target - the 134.32/61.8% of the move down from 2014. "We would allow for this to hold the initial test. We note the 13 count on the 240-minute chart. Provided that the uptrend at 130.85 contains the downside the longer term up move will remain intact," the analysts explained who suggest that above 134.32/58 would target the 1979-2017 resistance line at 139.12. Intraday dips will find some support offered by the 131.90 end of August high.
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