EUR/JPY: back on the bid through th 130 handle

Currently, EUR/JPY is trading at 130.04, up 0.32% on the day, having posted a daily high at 130.20 and low at 129.37.

EUR/JPY has recovered back to the 130 handle in a fickle market place with the yen tugged and pulled. Elsewhere, however, stocks are relatively stable and will offer support to the cross as we head towards the ECB interest rate meeting.

US stocks inch higher, recover part of overnight slump

"Markets are keeping a close eye on developments in the US as well as the ECB policy decision Thursday. Recent ECB rhetoric has cautioned that the central bank may not be ready to taper asset purchases until late this year while recent EUR gains have reportedly concerned some policy makers," explained analysts at Scotiabank. 

EUR/JPY levels

Analysts at Commerzbank explained that they suspect the formation developing is a possible megaphone top and note that these are difficult to trade:

 "Marginal new highs are not sustained and the market swings sharply back into the range –risks are growing on the downside. Attention is on the 55 day moving average, now at 129.32. Below here will target the 127.57 August low.  A drop below the 127.57/46 late June and current August lows would allow for slippage to the May high at 125.81," the analysts at Commerzbank argued.

For the upside, the analysts suggested that above 132.24/45 (August 2015 low and January 2016 high) would re-introduce the 134.32/61.8% of the move down from 2014.