FxWirePro: EUR/JPY breaks above 5-DMA, bullish divergence raises scope for further upside

• EUR/JPY is extending gains above 127 handle, breaks above 5-DMA on Thursday's trade.
   
• The single currency muted after EZ May manufacturing PMI confirms at 55.5, 15-month low.
   
• On Thursday, Trump administration announced that the EU, Canada and Mexico would now be subject to tariffs on imported steel and aluminium, and reignited concerns over a full-blown global trade war.
   
• Volatility likely to continue across markets and sentiment likely to be the main driver for the pair.
   
• Technical indicators are bearish. However, bullish divergence on Stochs keeps scope for upside.
   
• Immediate resistance seen at 127.66 (23.6% Fib), break above could see further upside.
   
• On the flipside, close below 5-DMA at 126.89 to see resumption of weakness.

Support levels - 127, 126.97 (5-DMA), 126.17 (50% Fib)

Resistance levels - 127.66 (23.6% Fib), 127.81 (1H 200-SMA), 128

Recommendation: Good to go long on break above 23.6% Fib, SL: 127, TP: 128/ 128.35/ 129

FxWirePro Currency Strength Index: FxWirePro's Hourly EUR Spot Index was at 76.5705 (Neutral), while Hourly JPY Spot Index was at -103.918 (Bearish) at 0930 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex. 

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