The EUR/JPY  increased in the last days and retested a very strong dynamic resistance (support has turned into resistance). It remains to see what will happen in the upcoming days because the rate seems undecided right now.

Price increased as the Japanese Yen was punished by the Nikkei stock index, which has rallied aggressively since Tuesday. A Nikkei’s further increase will force the Yen to lose more ground versus all its rivals and not only against the Euro.

The EUR/JPY was somehow expected to drop further on the short term, but as I’ve said, the Nikkei’s bounce back has forced the pair to bounce back as well. The Japanese data have come in mixed today, the Yen received support from the Unemployment Rate, which has increased from 2.4% to 2.5%, it has come in better versus the 4.6% estimate and from the Housing Starts, which has dropped by 2.6%, less versus the 4.6% estimate, the indicator remains in the negative territory.

Moreover, the Tokyo Core CPI rose only by 0.8%, less versus the 0.9% and compared to the 0.9% growth in the former reading period, while the Prelim Industrial Production surged only by 4.1%, less compared to the 5.1% estimate.

You can see that the rate has come back to test and retest the 150% Fibonacci line (ascending dotted line) and now seems a little undecided.Technically, the rate could drop again at least till the first warning line (wl1) of the blue ascending pitchfork. Price could be attracted also by the median line (ML) of the major red ascending pitchfork, but this scenario will take shape only if the JP225 will drop again.

Right now is hard to talk about a larger rebound, only a Nikkei’s major increase will force the Yen to depreciate much more versus the Euro and versus the other major currencies.