- EUR/JPY remains well bid on hawkish ECB minutes.
- Inverse head and shoulders on 1-hour chart.
- Focus on stocks market action.
EUR/JPY moved back above 134.00 levels in Asia and now looks set to test the inverse head and shoulders neckline hurdle of 134.28.
The common currency remains bid, courtesy of the ECB December meeting minutes, which called for a change in the forward guidance to better reflect the improving economy. The German bund yields could outpace their US counterparts as investors will likely price-in the possibility of ECB ending its QE program in September this year.
Thus, EUR/JPY may continue to gain altitude. Meanwhile, the JPY may find takers if the equities turn risk-averse on policy tightening. In such a case, EUR/JPY may find it hard to remain bid.
EUR/JPY Technical Levels
A 1-hour close above 134.28 (neckline hurdle) would open up upside towards 134.50 (Oct. 25 high), above which the pair could target 135.54 (inverse head and shoulders target as per the measured height method).
On the downside, support is seen at 133.78 (daily low), which, if breached, would expose 133.39 (50-day MA) and 133.00 (zero levels).
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