EURGBP Rebounds
If there is one currency pair that traded with a bid tone this year, it is the EUR/JPY cross. The pair benefited from a weak yen as well as from a strong euro, and now threatens to break above 134.
Consider yesterday, for example. The EUR/USD pair has a hard time breaking below 1.2170 area and keeps bouncing back to 1.22. At the same time, the USD/JPY rallied from 109 close to 110. Therefore, the combined price action on the two majors translated into a stronger EUR/JPY and the cross rallied a hundred pips.
However, at the current levels, the cross meets dynamic resistance at the upper side of a rising wedge. A rising wedge is a bearish pattern and the focus now shifts to the 133 area. A break there should trigger more weakness, but it is unlikely that such a break would come in the last trading days of the month.
The euro traded with a bid tone all month. The expectations are that the ECB will taper the asset purchases earlier than the Fed and this keeps a bid tone behind the common currency. The vaccination campaigns across Europe picked up in the second quarter of the year, giving another reason to buy the currency on a stronger than expected economic recovery.
Bears may want to sell the EUR/JPY short against 135 and targeting a move back to 130. On a break and close below 133, bears may want to add on weakness.
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