Big moves in the world of FX this week but none bigger than EUR/JPY, which gained 3.1%. The pair had its best week since February and gained +350 pips.
The yen has been the laggard for two weeks in a row and EUR/JPY has gained 700 pips in that time. Last Friday, I showed a similar chart and warned the yen crosses were on the cusp of breaking out.
It’s a beautiful move above the range that has persisted since August and it has broken the 61.8% retracement, which points to an eventual move to 111.44.
Before we get the next leg higher, I expect a retracement back to the old range in order to relieve some overbought conditions. The risk is that the dip is shallow before the climb continues.