EUR/JPY Technical Analysis: Upside favored after range breakout

The EUR/JPY pair closed yesterday at 125.04, confirming a bullish break of the recent narrowing price range. The immediate outlook, therefore, is bullish.

Daily Chart

As seen above, the range breakout is backed by the ascending 5- and 10-day moving averages (MAs) and the positive reading on the MACD (moving average convergence divergence) forest. The RSI, however, is still holding below 50.00.

The bullish setup would gain credence if the preliminary German CPI, due for release at 13:00 GMT, beats estimates, dashing hopes of a near-term dovish change in ECB's forward guidance. In that case, the pair could find acceptance above 125.27 (61.8% Fib R of 129.25/118.82) and rise toward 126.00.

A fall back inside the narrowing range would neutralize the bullish view.

Trend: Bullish