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Has EUR/JPY Made Spike Lows?
After a few days of massive volatility driven primarily by risk aversion flows, the EUR/JPY appears to have made a climax bottom as equities finally found a bid. With markets now focused on global risks such as broad slowdown of activity and the threat of an Ebola pandemic all capital markets have started to correlate much tighter and economic news has been pushed to the side. This dynamic has made EUR/JPY hostage to equity flows and the pair once again trading in sync with the stock market. The bounce back in stocks suggests that EUR/JPY will now found support above the 135.00 level as it consolidates after several days of volatility.
The sudden break and then recovery above the 135.00 level looks to be a classic climax low in the pair and as long as it can hold the lows at 134.15 it is likely to base for the time being. A break above 137.00 would alleviate much of the bearish bias, while a break below the 134.00 level would open the possibility of a move to 132.00