The EURJPY cross is having the biggest daily decline in months on the back of a stronger Japanese yen across the board amid lower US yields. It bottomed 143.98, the lowest since October 24.

EURUSD’s rally is keeping losses limited in EURJPY. The cross is testing a critical support area around 144.00. A break lower would open the doors more losses. The euro needs to keep that level in order to avoid deterioration in the already negative technical outlook.

The US October CPI showed numbers below expectations and triggered a rally in Wall Street and Treasuries. The sharp decline in US yields strengthened the Japanese Yen, the best performer on Thursday, with USDJPY falling more than 450 pips.

On the upside, resistance in EURJPY emerges at 145.50; although the cross needs to rise and hold above 147.00 for the euro to strengthen. If EURUSD keeps rising and risk appetite prevails, the on-course correction could find some reasons to slow down. The resumption of the uptrend would need US yields to turn to the upside again.

The cross seems to have embarked on a corrective phase and the continuation of this stance could challenge the so far November low at 144.03 (November 3) in the short term. Further south awaits the 55-day SMA, today at 143.28.

In the short term the upside momentum is expected to persist while above the October lows near 141.00.

In the longer run, while above the key 200-day SMA at 138.03, the constructive outlook is expected to remain unchanged.

EURJPY to revert from EMA50

Nov 11 2022