Forex: EUR/JPY extends above 109; JP election outlook keeping yen top-heavy

FXstreet.com (San Francisco) - EURJPY extended another leg higher Thursday, reaching fresh 8-month highs above 109.00 and closing the North American session at 109.37, poised to record a 2.6% weekly advance at current levels. Support levels are noted at 108.56 (50-hour EMA) and 107.95 (Dec 5 high), while next bullish targets lie at 109.90 (Feb 27 high), then the 111.50 price zone (Mar 21 high).

The Japanese yen is still taking hits across the board ahead of the Japanese elections this weekend. According to a Mainichi Shimbun survey, the Liberal Democratic Party (LDP) and its ally New Komeito is projected to will win more than 300 seats in the House of Representatives election. The same study is projecting that the ruling Democratic Party of Japan (DPJ) is likely to see its seat count fall below 80 after winning 308 seats three years ago.

Technically speaking, "EURJPY will again be the main focus and the recent uptrend is now consolidating between 108.60/109.50," says Sean Lee, founder of FXWW. "Volatility should remain very high and I do not expect to see many trailing stops emerge unless we break back below 108.00. Yesterday we saw some Samurai launches which increased demand for the Yen crosses so watch out for reports around the time of the Tokyo fix."