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Forex: EUR/JPY capped below 126.00

EUR/JPY has managed to return into the positive for the week so far, last at 125.27, up +0.27%, mostly on Euro strength, following much better than expected German ZEW economic sentiment. Survey showed best result since mid 2010, jumping to 48.2 from previous 31.5, when 35.3 was expected. Two main reasons were found behind such jump: sense of Euro crisis seen as over, and low interest rates.

EUR/USD printed fresh weekly highs at 1.3395, while USD/JPY found support at weekly lows 93.29, last at 93.53, about flat for the week, following yesterday's BoJ minutes, and comments from Japanese officials giving contradictory statements about new foreign bond purchases as easing measures, as well as indecision about new incoming BoJ chief. Nikkei index closed below the 11400 points mark, down -0.31%.

According to FXTimes analyst and CMT Fan Yang: “The EUR/JPY has remained bullish after holding above some support factors last week. However, the recent channel resistance is in the way. To start the week, EUR/JPY was unable to regain the bullish stance as it holds under that channel,” he says, adding: “Above 127.70 we have bullish continuation. Below 122.80-123, we could have topping and the first sign of reversal,” the analyst concludes.

Immediate resistance to the upside for EUR/JPY shows at Feb 08 highs 125.57, followed by Monday's/Feb 14 highs at 125.93, and Feb 13 highs at 126.57. To the downside, closest support lies at yesterday's/Feb 07 lows 124.55, followed by Feb 08 lows at 123.43, and Feb 15 lows at 122.89.

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