EUR/JPY clocks fresh 14-month high, upside break from the channel, what’s next?

EUR/JPY extended the four-day winning streak to a fresh 14-month high of 127.93 in Asia despite ECB’s U-turn on Draghi’s hawkish comments. 

Bullish break from sideways channel

The daily chart shows a bull flag breakout followed by an upside break of the year long sideways channel. 

Overbought RSI, Doji on German 10-year yield

Further gains may be hard to come given the overbought nature of the daily RSI. Meanwhile, the Doji candle on the German 10-year bond yield also indicates the market may have run ahead of itself and may give another thought to Constancio’s dovish comments. Meanwhile, hawkish central banks might weigh over the stock markets and boost demand for the Japanese Yen. 

EUR/JPY Technical Levels

The pair was last seen trading around 127.90. A break above 128.00 would open doors for 129.17 (0.618 Fib extension of Apr low - May high - June low) and 130.00 (zero levels). On the downside, failure to hold above 126.47 (Apr 2016 high) would expose 125.80 (May 2017 high) and 124.33 (weekly low).