EUR/JPY: hard rally but short of key level at 20 dma

Currently, EUR/JPY is trading at 123.66, up 0.60% on the day, having posted a daily high at 123.75 and low at 122.40.

EUR/JPY has rallied and extended the upside from the London shift trough the US session wth a comeback on Wall Street and risk in general. The dollar has been better bid throughout the day as well and the yen is pressured across the board. 

"The greatest near-term risk lies with the BoJ policy decision as we note the potential for an unexpected improvement in the official tone following mixed-confident signals over the past week. A reminder that recent headlines hinted to an official desire to begin communicating policy normalization plans," explained analysts at Scotiabank. 

EUR/JPY levels

EUR/JPY held the 122.56 level being the 18th May low and rallied, However, the cross is still some way off where analysts at Commerzbank highlight as a key area being above the 20-day ma at 124.13. "We will assume a retest of the recent range high at 125.81/80 is in the offing. Below 122.56 and we should see losses extend to the 121.65 55 day ma and 119.66 200 day ma. We suspect that it will attempt to stabilise in this vicinity."