The EUR/JPY pair forms a triangle against strong resistance and is in danger of putting a double top pattern. The more time passes without a clear break of this triangle to the upside, the more the sellers will pressure the cross.
A triangle like the one seen below typically builds pressure against a horizontal line. However, the time it takes to consolidate is shorter than seen below, so bulls may be trapped here.
On the one hand, the market may pop higher in a false break and quickly retrace below the lower edge of the triangle. On the other hand, a direct move below the lower edge will confirm the triangle as a reversal pattern.
Euro remains bid as the vaccination campaign in Europe gains steam by the day. The European Commission announced that it would end the contracts with Johnson & Johnson and AstraZeneca when they expire and replace the jabs with more from Pfizer/BioNTech.
The key here is to see how fast Europe manages to reach herd immunity – the faster, the better for the economy and the common currency.
EUR/JPY Technical Analysis
The technical picture, as mentioned earlier, looks bearish. Bears may want to wait for a break below the lower edge of the triangle before selling against the highs with a risk-reward ratio of 1:2.