EUR/JPY breaks through trend-line

After bouncing off from a support level formed by the monthly PP at 123.89, EUR/JPY broke successfully through the upper boundary of an ascending channel near the 124.39 mark. Subsequently, the pair retraced back and tested the nearest support provided by the upper channel boundary, the lower Bollinger band and the 55-day SMA in the 124.30 area. The base scenario favours the Euro appreciating against the Yen. The upside potential, however, is likely to be limited, as a new resistance level set up by the weekly R1 at 124.94 should prevent the rate from climbing higher. On the other hand, the pair might make a correction and return back into the channel. Nevertheless, it is expected that the pressure from the above-mentioned support cluster should block this attempt.