EUR/JPY: testing key resistance levels, basing above 100-D SMA

• EUR/JPY: through key 100-D SMA, but has it got more legs?
• EUR/JPY: stocks and ECB to weigh the pair down during the week?

EUR/JPY has been tracking USD/JPY higher as the yen cools off, despite the flop on Wall Street. Geopolitical concerns have been put on the back burner and instead, investors are concerned about higher borrowing costs with the resurgence in yields, driving the dollar higher.

Currently, EUR/JPY is trading at 133.33, up 0.47% on the day, having posted a daily high at 133.51 and low at 132.62. Yield spreads are widening to fresh 10 year highs, and risk reversals suggest a continued erosion in the premium for protection against JPY strength. USD/JPY has rallied onto the 109 handle, piercing the 100-D SMA with scope to 110.00. 

EUR/JPY: to be anchored by stocks and ECB? 

However, EUR/JPY is usually correlated to stocks and with the ECB on the cards this week, it may struggle to find as much traction as we progress through the week should stock continue to struggle and the ECB be expected to play out on the dovish side. 

EUR/JPY levels

EUR/JPY broke the 100-D SMA and the 133.24 50% retracement level, with a  test of the top of the cloud at 133.43. "Dips lower should be contained by the 20 and 55 day ma at 131.86/67 and while above here we will assume an upside bias. Further up lies the 134.25 61.8% Fibonacci retracement," analysts at Commerzbank argued, adding, "dips lower should find interim support at the 131.82 late March high and further support at the 131.16 November low. This guards the March low at 128.96."