A quick look at the weekly EUR/JPY chart shows that the downtrend is still in control but prices are trying to build a base. An intermediate trendline off 138.50 has been pierced this morning and prices have quite a bit of scope to retrace back towards the 100-week MA. The 61.8% retracement of 134.20/105.60 also comes in at 123.25 so if prices do turn aggressively higher, this is an obvious target area.
If you look back to May last year, EUR/JPY fell 15 big figures in a week and it is quite capable of a similar move in reverse if the market turns it’s attention to the Japanese debt situation (and if the market is still short EUR/JPY). Definitely a pair to keep a close eye on, especially on a break above 115.70 where I’m sure there will be squizillions of stops. The chances of such an event are relatively small, less than 15% say, but they still should be considered.
