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Forex: EUR/JPY opens sharply higher, pair set to re-test 131.00?

The EUR/JPY is starting the week on a strong note, gapping up 68 pips to open at 130.53. It looks like the pair has its eyes on re-testing the 131.00 resistance level which capped advances last week.

According to Chris Capre, founder at 2ndSkiesForex, “After a sharp sell-off early in the week, the pair recovered nicely off successive pin bars, with each making a HL (higher low). The bullish impulsiveness is building while the bears are showing less enthusiasm, suggesting a continual building of longs.” He went on to add, “the next challenge for the bulls is 131 which is the yearly high. Bears can look for price action signals here, while bulls can look for pullbacks towards 128 and 126.50 to add longs on corrective moves lower.”

The FXStreet.com Trend Index remains in slightly bullish set up on the daily chart, while the OB/OS reads neutral. Furthermore, price is above the 9day and 20 ma’s, which are both sloping upward. This is also a constructive development and should keep any pullbacks limited.

Forex Flash: Sterling looks range bound between $1.52 and $1.54 – BBH

After closing sharply lower last Friday on the UK credit rating downgrade by Fitch, the GBP/USD is starting the week off on a quiet note. According to Marc Chandler, Global Head of Currency Strategy at BBH, “Sterling also looks range bound between $1.52 and $1.54. However, the tone is poorer and the 5-day moving average is set to cross below the 20-day in the days ahead for the first time since March 19, warning the 6-cent upside correction is may be ending.”
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