EUR/JPY Price Analysis: Confined to the 136.00-138.00 despite an improved sentiment

• The EUR/JPY record gains for the second consecutive day and remains defensive as a head-and-shoulders pattern looms.
• The sentiment is positive; once Fed Chair Powell said that 75-bps increases are not in the table, US equities rallied sharply.
• EUR/JPY Price Forecast: The head-and-shoulders clouds the prospects of a higher EUR.

The EUR/JPY remains subdued amidst an upbeat market mood, courtesy of the telegraphed 50-bps hike by the US Federal Reserve, and also as Fed’s Chief Powell discarded 75-bps increases, US equities rallied. At the time of writing, the EUR/JPY is trading at 137.19 as the Asian Pacific session begins.

The market sentiment is upbeat, as US equities closed with hefty gains, between 2.81% and 3.41%. Asian stocks futures look set to open higher despite China’s coronavirus crisis. Developments around the Ukraine-Russia conflict remain in the backseat as investors focus on the central bank’s monetary policy decisions.

However, news across the wires reported the reiteration of Russia that Kyiv desire to withdraw from the negotiation process, according to Al Jazeera. Meanwhile, Euro area countries proposed a ban on Russian oil, which would be effective in six months with no gradual phase-out, as reported by Reuters.

On Wednesday, the EUR/JPY pair opened near the 137.00 mark and seesawed around a 20-pip range ahead of the US central bank monetary policy meeting. Once the headline crossed wires, the EUR/JPY seesawed around 136.60-137.40, settling afterward at around  137.20s.

EUR/JPY Price Forecast: Technical outlook

From a daily chart perspective, the EUR/JPY bias remains upwards, but a formation of a head-and-shoulders chart pattern looms. To question the latter’s validity, EUR/JPY bulls need to reclaim 137.98. Once done, the head-and-shoulders would not be valid.

With that said, the EUR/JPY first support would be the 137.00 mark. If EUR/JPY bears break that level, that will expose the 136.00 figure, followed by the head-and-shoulders neckline around 135.00-20.