Following is a selection of comments from analysts on important technical developments in the foreign exchange market.
Hourly MACD (moving average convergence diversion) histogram seems to be trending higher towards a bullish cross of the zero line, so, while above $1.2120/25, thinking higher.
Below $1.2120/25 and we have to consider risk towards $1.2105-$1.2090. Only below $1.2090-$1.2075 would truly question the idea of further gains, $1.2045 then seemingly vulnerable as well."
That said, we have 115.55 capping the bounce from 114.90 (Thursday's channel base level). Above here would offer a better 115.70 and potential 115.90, but overall cautious while this 115.70-115.90 caps gains.
Above 115.90 and we'd have to concede to the idea of a 116.20 retest and possibly marginal new highs. Below 115.05-114.90 and we should see 114.65-114.45. Below here and bigger picture starts to unravel towards 113.80-113.40."
As long as the pair holds out within these boundaries, we maintain our current neutral outlook. A violation (on a closing basis) of one of these barriers will trigger a trend in the direction of the breakout.
Given the general US dollar strength of the past weeks, we have a preference for a break below the sideways trading range. All in all, we feel comfortable with our current neutral stance."
Although the overbought condition in the indicator can last a while longer, it will have to trigger a reaction eventually.
Since countertrend moves often happen in the vicinity of chart resistance, the March and April highs at 140.75 yen act as a likely candidate to temporarily interrupt euro optimism. A pullback towards the rising trendline drawn from the late September low could well occur.
Therefore we advise some caution around 140.75 yen. All in all, the prevailing trend of euro/yen remains up, but chances of a temporary pullback are fair."