As above-mentioned, a rising wedge formed in the EUR/JPY daily chart, with most daily lows tracking the 50-day Exponential Moving Average (EMA) as a dynamic support. Although the cross continues to advance steadily, price action shrank during the last four trading days. That would mean the EUR/JPY is consolidating or a breakout is about to happen.

Supply chain bottlenecks led by Russia-Ukraine tensions have resulted in a significant decline in Eurozone economic activities. Also, expensive energy prices have weighed on the real income of households. Meanwhile, chatters over a price cap on energy have triggered fears of destabilization of the market.

If the EUR/JPY clears 146.00, it could exacerbate a rally toward the year-to-day (YTD) highs around 148.40, but on its way north, buyers need to surpass some resistance levels. The first one would be the ascending-wedge top trendline around 146.50, followed by the November 9 daily high at 147.11. Once cleared, the psychological 148.00 is next.

Otherwise, if the EUR/JPY breaks below the rising wedge, the first support would be the 50-day EMA at 144.12. A breach of the latter will expose the 143.00 figure, followed by the November 11 swing low around 142.54.

The cross reversed the strong rebound soon after trespassing the 146.00 mark on Wednesday and sparked quite a marked reversal. That said, further weakness could now motivate EUR/JPY to slip back to the November low at 142.54 (November 11) sooner rather than later.

In the longer run, while above the key 200-day SMA at 138.68, the positive outlook is expected to remain unchanged.

EURJPY being volatile in midst of Russo-Ukrainian war

Nov 24 2022

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