EUR/JPY extends range trade into the European session after recovering from multi-month lows at 128.67 hit on Monday.
- Yen's rally against Euro and Dollar halts as risk-on returns in the markets after Chinese equities recovered from previous slumps after PBoC injected liquidity into the markets.
- Trend is definitely lower, the pair has been trading a falling wedge since July 2015, price action held below the cloud.
- But EUR/JPY downside looked capped by strong trendline support which the pair tested on Monday's trade.
- Stochs are in the oversold territory and on the verge of a bullish crossover. We will await for further confirmation to go long.
- EZ inflation and German employment data due ahead in the European session in focus for further direction.
- The next hurdle on the upside lies at 129.48 (session high Jan 5th), above which it could extend gains to 130 (psychological level).
- To the downside, the cross finds immediate support at 129.07/00 (session low), below that 128.70 (trendline), could act as a major support.
