EUR/JPY Testing 113.50; The 91.0 Scenario
- Daily: The EUR/JPY is testing a low around the 113 area. This is also the 2009 low and a break below it has significant bearish implication.
- For now, the 113.00 area appears to support the pair as the week started with a dip but a correction to pare all the losses by the US session. If the US session supports the EUR/JPY, we should stalk this correction rally.
- It may head towards the 121.00 powerline. However, the strength of the recent decline suggest we may not have a strong correction rally. Then we also have to anticipate the possibility the market will break below 113.00 very soon. In that situation, we have to look at the higher time-frame for the next target.
- Monthly: The monthly chart shows the pair testing the 2009 low. So far, the market has not broken below, and although the heavy May candle threatens it, I would anticipate possibility of a minor bounce before this break.
- The fundamentals has been euro-negative and the market may be sensitive to news. In the interplay between fundamental and technical, the support at 113.00 is probably reflective of the remaining confidence that the EU will pull through this crisis. The other side of it is a break up, which could send euro crosses tumbling.
Fan Yang Currency Analyst Commodity Trading Advisor