EUR/JPY created a higher high earlier today, posting a fresh two-month peak of 131.67. Currently, the price is moving above the 20- and 40-simple moving averages (SMAs) in the 4-hour chart, indicating a possible upside extension.
However, the technical indicators have lost their strong positive momentum as they are flattening. The stochastic oscillator is moving sideways in the middle area, while the MACD oscillator stands near the trigger line and above the zero line.
A move to the upside may meet resistance around the intraday high of 131.67. In case of further bullish extensions, the price could re-challenge the 131.97 level, taken from the high on July 17. A significant step above these levels could drive the pair until the next immediate resistance level of 132.50, identified by the high on April 30.
Alternatively, the 20- and 40-SMA, which are hovering around 130.80 and 130.20, could provide immediate support levels. If there is a slip below the SMAs there is an expectation to hit the 129.97 support barrier, which holds slightly below the 23.6% Fibonacci retracement level of the up-leg from 124.90 to 131.67.
Overall, the market is expected to hold bullish in the short-term after the rebound on the 124.90 support hurdle on August 15.
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