EURJPY Surpasses 126.00 Key Level with Strong Momentum

Technical analysis of Forex market

EURJPY stretched its two-day rally above the 40- and 100-period simple moving averages (SMAs) moving towards the 126.00 handle.

The stochastic seems to be losing momentum below the overbought territory, the RSI is pointing north in the positive area and the red Tenkan-sen is ticking up below the blue Kijun-sen, all signaling a more cautious trading in the short term.

Should the price extend above the 126.00 number, resistance to upside movements could be initially detected around the 18-month high of 127.05. Clearing that zone, the next stop could be around 127.55, tested on February 2019.

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Alternatively, the pair needs to decline below the 40- and 100-period SMAs to meet a key barrier around the 20-period SMA and the 125.18 support. The 124.43 mark could act as support too before a more important battle starts near 124.00.

In the medium-term picture, the sentiment turned neutral after the price failed to surpass the 127.05 high. The positive slope in the 20-period SMA, which moves closer to the 100-period SMA, also adds optimism for a brighter outlook.