EURJPY retested the broken uptrend line on a weekly chart again on Friday, also perfect test and bounce of the line and 200SMA. Today JPY is strong, gaining back some of the ground lost on Friday. The uptrend line was confirmed multiple times and retested before, showing how strong and valid it still is.
EURJPY 4-hour outlook
4-hour chart shows potential support level on the way around 121 and 50SMA. So far is the market mood remains bullish, this is a good ‘buy the dip’ moment. Lower time frames offer opportunity to buy before the weekly 200SMA is broken, through 124.50, and we can add more longs. If FOMC shifts the sentiment and JPY picks up, we could see some selling opportunity, but all depends on Jerome Powell and his speech.
Fundamentals still look positive as economies slowly reopen and people get back to consumption. This Wednesday FOMC could create ripples in the FX market depending on their forward guidance and stimulus packages. So far, they have already printed trillions of USD and pumped them into stock market to keep it up. Bullish moves in the stocks created a risk on mood, severely crippling JPY as investors were moving money into risk assets.
ECB last week prepared another 600 billion euros stimulus package for the economy and EUR made the biggest jump last week in 2020, as investors had a major FOMO case and did not want to miss the chance on jumping on the bullish train with all this positive sentiment in Europe as countries open their economies and stimulus should protect businesses from bankruptcy.