![\"EURJPY](\"http:\/\/www.laidtrades.com\/wp-content\/uploads\/2010\/07\/062810eurjpy.png\")
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Against the US dollar, the euro has been showing a lot of strength as of late (kindly see my post here<\/a>). The EURJPY<\/a>, on the other hand, was a pace or two behind. While the EURUSD was already moving north, its cousin was still stuck in consolidation mode. Just recently, though, the latter appears to have broken free. As you can see from the chart, the pair has just broken out from an inverted head and shoulders pattern. Now, will it follow the EURUSD? Will it be able to break above the long term downtrend line as well? In any case, its upside target as a result of the breakout is now seen to be at 120.00. A previous support and the downtrend line, however, lie at that level which will make it a notch tougher for the pair break. Nonetheless, a move above this could send up to 128.00. A failure to do so, on the flip side, could pull it back to the neckline of the inverted head and shoulders.<\/p>\n Fundamentally, the expected uptick in Germany\u2019s month-over-month CPI in July (from 0.1% to 0.2%) and in the euro zone\u2019s year-over-year CPI in July as well (from 1.4% to 1.8%) could bolster the demand for the euro. Remember that the European Central Bank or the ECB uses inflation figures as a basis of their monetary policy. So with inflation, confidence, and the equities markets going up plus the apparent silence in the the euro zone with regards to their fiscal situation, the ECB could at least consider tightening their monetary stance sooner than initially seen.<\/p>\n In Japan, the 3.3% year-over-year projected jump in retail sales for the month of June could spark some short term risk taking in the Japanese markets, leading investors to sell or borrow some yen which we know has a very low cost of 0.10% to fund their investments in equities. At the same time, the continued slide in the country\u2019s consumer prices (Tokyo CPI seen to be at -1.2%) could also place some selling pressure on the yen.<\/p>\n