EUR/JPY - Convincing move above 200-day MA remains elusive

• Bottom found last week, but recovery capped around 200-day MA.
• Focus on stocks.

EUR/JPY created a bullish outside day candle on March. 5 and rose above the 200-day moving average on the following day, confirming the sell-off from the Feb. 2 high of 137.51 has ended.

However, since then a convincing move above the ascending 200-day MA has remained elusive. As of writing, the pair is trading at 131.33 - just below the 200-day MA of 131.48.

Reuters report says the pair has been trapped in 130.53 to 132.02 range since March. 1. That said, the odds of an upside break are high if we take into account the fact that EUR/JPY risk reversals have retraced major chunk of put bias in the recent days.

Currently, the risk reversals are being paid at 1.225 EUR puts vs. 2.85 EUR puts seen on Feb. 12. The drop in the implied volatility premium for EUR puts (bearish bias) adds credence to the argument that the pair has bottomed out at 129.35 and shows increased odds of an upside move.

EUR/JPY Technical Levels

A close above 132.02 (March 6 high) would expose resistance at 133.06 (Feb. 21 high) and 133.38 (100-day MA). On the other hand, a violation at 130.96 (10-day MA) would allow re-test of 130.53 (March 8 low). A close lower would mean the corrective rally from 129.35 has ended and would allow a test of said level.