EUR/JPY - 136.00 is a tough nut to crack

• EUR/JPY uptrend on hold near 136.00.
• Draghi to talk down EUR?
• Fears of US government shutdown could keep Yen well bid.

The rally in EUR/JPY from Jan. 11 low of 133.02 seems to have come to a halt around 136.00 levels this week.

The pair has had a tough time chewing through 136.00 levels in the last four trading days and the situation is no different today. Having clocked a high of 136.05, the pair now trades largely unchanged on the day at 135.92 levels.

Most analysts believe the markets have run ahead of themselves and that Draghi is likely to tame the hawkish at the ECB next week. Also, the latest Bloomberg survey showed economists expect the ECB to begin changing the forward guidance in March. This could be capping the upside in EUR.

Also, fears of a US government shutdown have put a bid under the Japanese Yen (USD/JPY is down 0.32%). The US House has passed the bill and now faces a bigger test in the Senate. EUR/JPY could drop sharply if the Senate rejects the funding bill, leading to a government shutdown.

EUR/JPY Technical Levels

A break above 136.00 (zero levels) would expose resistance at 136.31 (previous day's high) and 136.64 (Jan. 5 high). On the downside, breach of support at 135.66 (5-day MA) could yield a sell-off to 134.98 (Jan. 16 low) and 134.80 (Jan. 3 low).