EUR/JPY: has eroded the 55-D MA and the 2018 downtrend line, bullish bias

• EUR/JPY has been bid and comfortably so above the 100-D SMA at 130.26.
• ECB's President Draghi was speaking in parliament and came with an upbeat assessment of the economy.

EUR/JPY has been scoring fresh highs in a continuation of the late June rally from the depths of the 127 handle. The risk is on, stocks are up, DXY lower, euro knocking on the door of the 50-hr SMA and USD/JPY is consolidating at the highest levels since 20th May. EUR/JPY is currently trading better bid at 130.63, a few pips shy of 130.70 the high.

EUR/JPY has been bid and comfortably so above the 100-D SMA at 130.26, penetrated yesterday with a close above.  The cross is tracking stocks while EUR/USD struggles to convince around the 50-D SMA having formed a bearish doji yesterday with the long upper wick, running out of steam in today's performance.  

As for events, ECB's President Draghi was speaking in parliament and came with an upbeat assessment of the economy, expressing confidence that monetary policy was working and was convinced that inflation would converge with the central bank’s 2% target. 

EZ data mixed

For data, Germany’s ZEW investor sentiment index softened this month on trade tensions (72.4 from 80.6) but the index remains generally elevated. However, EZ ZEW dumped, -24.7 in July from -16.1. This was the weakest since -25.5 in Aug 2012. French industrial production fell a weaker than expected 0.2% in May (+0.7% M/M expected).

EUR/JPY levels

Analysts at Commerzbank explained that EUR/JPY has eroded the 55-day ma, the 2018 downtrend line and the 130.35 mid-June high – and upside risks are growing. "The DMI now has a buy signal and the market has broken above the daily cloud for the first time since February and this has increased the risk of a break higher. We look for further gains to the 131.34/50 May highs and 55 week ma and possibly even for the 133.48 April peak," the analysts added.