EUR/JPY Price Analysis: Bulls are in charge target 130

• On Thursday, the EUR/JPY rallied 120-pip above 129.00
• The market sentiment is upbeat, with global equity futures indices posting gains.
• Evergrnade’s woes fade, but caution is warranted.

The EUR/JPY bulls take a breather. On Thursday, the pair posted a 120-pip rally, printing a new weekly high at 129.55, recording almost a 1% gain on the day.  Early in the Asian session, the EUR/JPY is trading at 129.50, barely down 0.02%, at the time of writing.

The market mood is upbeat. Major Asian equity futures indices are up, except for the Topix, which is falling 0.07%, while European and US futures are posting gains. The British pound and the euro are the strongest currencies in the FX market, while the US Dollar is the weakest across the board. 

China’s Evergrande worries are fading.  The real-estate company supposedly would pay the interest in the yuan-denominated bond coupon. However, an article in the WSJ raised investors’ concerns about the possibility of a negative to pay the interest in US dollar-denominated debt bonds, leaving international investors adrift.

EUR/JPY Technical Analysis

Daily chart

The EUR/JPY uptrend move was capped by the confluence of the 50 and the 200-day moving average (DMA) around 129.51. A daily close above the latter would support the bullish bias in the EUR/JPY. In case of that outcome, the EUR/JPY bulls will find their first resistance level at the downslope trendline around the 130.00-20 range. The following supply zones would be the September 8 swing high at 130.69, followed by the psychological 131.00.

On the flip side, failure at 129.51 could pave the way for further losses. The first support would be 129.00. A break of the latter could push the cross-currency towards the key demand levels, being July’s 20 low at 128.59, the first hurdle on its way towards 128.00.

The Relative Strength Index is at 51, aiming higher, supporting the bullish bias.

KEY TECHNICAL LEVELS TO WATCH