Ella 
EUR/JPY climbed for a second day in a row, surpassing last Thursday’s high of 158.92, but EUR/JPY declined to end the day at 158.74, up 0.19%.
The fundamental backdrop for EUR/JPY has not changed, with the market maintaining risk aversion as a driver of price action this week, while the Bank of Japan’s pledge to maintain ultra-loose monetary policy has put pressure on the Japanese yen (JPY). Meanwhile, more promising economic data from the euro zone has boosted prospects for a rate hike from the European Central Bank, while the euro (EUR) is not out of the woods yet. Looming fears of an economic recession, coupled with an inflation rate that is twice the European Central Bank’s target, have heightened market speculation about stagflation.
From a technical perspective, the direction of EUR/JPY is unclear, with EUR/JPY remaining consolidative but slightly tilted to the upside. If EUR/JPY breaks above 159.00, bulls could test the year-to-date (YTD) high of 159.76.
On the downside, if EUR/JPY bears enter the market, the first level of support would be 158.00, followed by the top of the Ichimoku cloud at 157.75/95. Once below this pattern, EUR/JPY will consolidate within the Ichimoku cloud, indicating that bears are gathering momentum, with the next support being the conversion line at 157.85, followed by the baseline at 156.64.
