The EUR/JPY rallied today and is almost to delete the yesterday’s losses as the Yen is punished by the Nikkei’s impressive rally. The Japanese stock index edged higher and reached fresh new highs today. EUR/JPY is trading in the green and has managed to jump above the 134.00 psychological level and it could climb towards the 135.00 psychological level in the upcoming days if the Nikkei stock index resumes the upwards movement.

The Yen dropped also versus the greenback also because the Japanese Flash Manufacturing dropped unexpectedly, it was reported at 52.5 points, much below the 53.1 estimate and versus the 52.9 points in the former reading period.

I’ve added the Nikkei stock index to show you what’s happening with the Yen and why it could drop further versus its rivals. You can see on the Daily chart that has managed to resume the upside movement and jumped above the 21837 yesterday’s high. JP225 is strongly bullish on the short-term and looks determined to approach and reach the lower median line (LML) of the major ascending pitchfork where he may find resistance again. The index should climb further after the yesterday’s gap up and after the failure to close this pattern.

EUR/JPY increases after the failure to retest the outside sliding line (SL) of the major red ascending pitchfork and the minor uptrend line. Is expected to reach the 150% Fibonacci line (ascending dotted line) in the upcoming days and maybe the median line (ml) of the blue ascending pitchfork, where he may find a strong supply again.

Price failed to reach the confluence area formed at the intersection between the median line with the 150% Fibonacci line, so technically is somehow expected to drop again after the retest of the median line (ML).

Price has developed a Rising Wedge pattern on the Daily chart, but this is far from being confirmed as we had  only a false breakdown in the previous week, but a failure to close above the 134.39 level will signal another leg lower.