EUR/JPY: consolidated around the key 121 handle

EUR/JPY is currently trading at 121.03 with a high of 121.17 and a low of 120.89.

The cross collapsed last week with the underperformer being the EUR that fell from 1.0780 to 1.0730 following a gain in polls by French populist Le Pen. Meanwhile, USD/JPY fell from 113.40 to 112.57 last Friday in the US session, with the yen outperforming on the day. However, should the euro and stocks find traction again, the cross could pick up a bid within its recently formed bullish trend at the end of February.

On the back of the recent jobs data and dovish Fed hike, the euro has been targeting the early February high near $1.0830, which also corresponds to the 50% retracement of the losses since the US election (~$1.0820).  "Technical indicators favor additional gains, though the proximity of the upper Bollinger Band (~$1.0750) may deter new aggressive buying before a pullback," suggested analysts at Brown Brothers Harriman.  With the BoJ's recent bearish outcome for the yen and a more optimistic rhetoric from the ECB with a less dovish stance, the cross could attract a bullish bias while remaining above on or above the psychological 120 handle. 

EUR/JPY levels

"EUR/JPY is easing back from its four-month resistance line at 122.79 and also the 2015-2017 downtrend," noted analysts at Commerzbank. "These represent pretty tough resistance for the market but we look for dips lower to remain relatively shallow," they explained.

Longer term outlook is positive: 

"Above the 4 month downtrend lies another downtrend at 123.88 and the 124.08 December high. Where are we wrong? Only below the 118.25 recent low will negate our upside bias. Below here lies the 117.58 200 day ma and the 116.69/37 50% retracement," - Commerzbank.