EUR/JPY rebound takes shape with May opening range in focus

EUR/JPY may attempt to retrace the decline from the monthly high (151.62) as it snaps the series of lower highs and lows from last week, and the exchange rate may stage further attempts to test the March 2008 low (151.69) as long as it holds above the monthly low (147.13).

EUR/JPY Rate Outlook

The recent weakness in EUR/JPY triggered a sell signal in the Relative Strength Index (RSI) as the oscillator fell back below 70, but lack of momentum to trade below the 147.00 (78.6% Fibonacci extension) handle has pushed the exchange rate back above 148.30 (100% Fibonacci extension).

In turn, EUR/JPY may mirror the price action from last month as it registered the April low (142.55) during the first week of trade, with a break/close above 149.60 (100% Fibonacci extension) bringing the March 2008 low (151.69) back on the radar.

However, EUR/JPY may face range-bound conditions if it struggles to trade back above 149.60 (100% Fibonacci extension), and failure to defend the monthly low (147.13) along with a break/close below the 147.00 (78.6% Fibonacci extension) handle may lead to a test of the 50-Day SMA (145.18).

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--- Written by David Song, Strategist