- Brown Brothers Harriman (based on Reuters)
On Wednesday the European single currency prolonged its recovery against the Japanese Yen, but was unable to breach the immediate resistance cluster. The weekly R2 and the Bollinger band keep providing strong resistance around 127.75, which is the final obstacle before the given pair can reach the second target—the cluster around 128.75. Meanwhile, the immediate support is formed by the weekly R1 and the 55-day SMA circa 126.90, which kept the EUR/JPY cross afloat since the beginning of the week. Even though technical indicators are giving mixed signals, the bullish outcome is the most probable scenario.
Market sentiment shifted to the bearish side, as 53% of all open positions are now short (previously 46%). There are nearly three quarters (73%) of orders to sell the Euro, compared to 63% yesterday.