Forex: EUR/JPY still capped below 122.00

EUR/JPY is last at 121.75, still capped below weekly starting price around the 122 level, ahead of key risk event Thursday in the form of ECB meeting. The cross has not seen yet any upside for the week, recovering from a double weekly low at 121.10, on the back of relatively Yen strength. Volatility as measured by daily average range keeps shrinking down to fresh 2-month lows around the 186 pips, off recent 2-year highs at 235 pips post-Italian elections, and coming from multi-year lows back in mid Sept when it was below the 100 pips.

According to Valeria Bednarik, Chief Analyst at Fxstreet.com: “The EUR/JPY continues to trade in between Fibonacci levels still neutral according to the hourly chart. 100 and 200 SMA’s converge in the same area, reflecting the lack of direction of the pair, although price stands above them, while 100 one approaches the larger one, suggesting certain buying interest around,” the analyst notes, adding: “The pair will likely lead the session, with the upside favored if local share markets suffer an optimism contagion, with a break above 122.00 favoring a run towards 122.60 area, 61.8% retracement of its latest daily fall,” she concludes.

Valeria finds support levels at: 121.20, 120.90 and 120.40, while resistance levels at: 122.00, 122.60 and 123.10.