Citi flags a scope for downside moves in EUR/JPY and USD/JPY over the coming weeks.
Following the break of the 10d MA, EURJPY has already declined below the 21d MA. Stretched EUR longs by leveraged investors have decreased to some extent, so the downside room will be limited for now at around 127.9, a 50% Fibonacci retracement of the rise since the beginning of this year, although we don’t rule out a correction risk to around 124.5, a 38.2% retracement of the rise since last May, in coming weeks potentially," Citi notes.
"USDJPY has to break the 21d MA (around 108.1 now) that has functioned as a strong support from January, before confirming its peak in this cycle. With the CitiFX Position Index indicating USD longs are increasing while JPY shorts are elevated, we think if that’s the case, downside room will be extended to around 105.5 in coming weeks, where the 200d MA lies," Citi adds.