By: Mike Kulej
The Euro has been among the most volatile currencies lately. Driven by developments of the sovereign debt crisis in Europe, the common currency has had difficulties maintaining a steady trend, and especially holding on to any gains.
In case on the EUR/JPY, after reaching the high of the 123.31 in early April, the price has been mostly falling. After the initial drop to 113.39, it moved sideways for a while and eventually made another move down to 109.56, where it found support.
From there the EUR/JPY rallied to the current level of 113.10. Positive news from Brussels regarding second bailout for Greece lifted the price, but the continuation is in question here. The price approaches an important resistance in the 113.60-70 area, where its next direction will be decided.
Couple of different factors provides the resistance. One is the previous support at 113.60, which by now has changed into a resistance. The other one is the 50% Fibonacci retracement level of the 117.32-109.56 price swing. Combination of these two obstacles makes this level very important for the EUR/JPY and it might be tested soon.