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Forex: EUR/JPY looking overbought, set for bearish correction?

By FXstreet.com,  January 03, 2013, 08:39:00 PM EDT

FXstreet.com (San Francisco) - EUR/JPY holds a slight bid tone ahead of the Tokyo fix, underpinned by USD/JPY buying interest, after the euro slid 150 pips against its Japanese counterpart yesterday on safe haven bids after the latest Fed minutes weighed on risk sentiment. The cross now stands at 114.10 from an intraday low of 113.77, while USD/JPY has managed to extend bullish gains to 87.75 so far this Friday, reaching fresh 2-year highs.

Technically speaking, the 200-week EMA (114.53) looks to be attracting sellers after price failed to reach 78.6% retracement resistance around 117.00. Studies in long-term timeframes show the market in overbought territory, so bears may be looking for more reasons to short in the week ahead. For now though, in the short-term, EUR/JPY may be still be a good candidate for 'buy-on-dips' given expectations of further easing from Japanese officials.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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