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Talking Points:

• EUR/JPY Technical Strategy: Short at 135.25

• Support: 128.00, 126.85, 125.69

• Resistance:130.63, 131.79, 132.94

The Euro recoiled downward after testing the boundaries of its three-month down trend against the Japanese Yen. A daily close below the 38.2% Fibonacci expansion at 128.00 exposes the 50% level at 126.85. Alternatively, a push above 130.63 (38.2% Fib retracement, January 26 low, trend line) opens the door for a test of the 50% threshold at 131.79.

We sold EURJPY at 135.25 and subsequently booked profits on half of the position. The remainder of the position remains open to capture any further downward momentum. The stop-loss has been trailed to the breakeven level (135.25).

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Daily Chart - Created Using FXCM Marketscope

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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