FxWirePro: EUR/JPY spikes past 130 handle, focus on Italy-German yield spread for further impetus

EUR/JPY chart on Trading View used for analysis

• EUR/JPY spikes past 130 handle, trades 0.41% higher on the day at 130.04 after hitting highs of 130.20.
   
• The pair has bounced of cloud support and decisive break above 55-EMA eyes 200-DMA at 130.64.
   
• On Friday, Moody's ratings agency downgraded Italy's credit rank from Baa2 to Baa3 but maintained stable outlook. 
   
• The decision was not as bad as markets feared. Markets expected that Moody's may cut the nation below investment grade.
   
• Focus now on action in the Italy-German bond yield spread. EUR could rally if Italy-German spread drops further.
   
• We see a slight turn in the technical indicators on the daily charts. Stochs are on verge of rollover from oversold levels.
   
• Decisive break above 55-EMA targets 200-DMA. Violation there could see further bullishness.

Support levels - 129.49 (5-DMA), 128.75 (cloud top)

Resistance levels - 130 (55-EMA), 130.64 (200-DMA)

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.