The EUR has been sliding further against the JPY over the last few weeks amid continued fears that European countries continue the struggle to find a balance between continued growth stimulation and spending cuts. While Japan has continued to show signs of growth recovery fuelled by demand for Japanese exports, European nations in contrast may find they are facing a double dip crises seriously impeding growth.
With the sovereign debt crises being a key factor in the coming weeks G20 meetings, leaders will be focused on what can be done to ensure growth continues. With the engine room of the global economy typically being the USA consumer, confidence may rise in the face of Chinas actions with regards to being flexible on their currency exchange rate, potentially making exports to China cheaper and bringing the USA one step closer to breaking the reliance of the world on the USA consumer.
The continued Euro weakness against the JPY has been reflected in the price action, with the Euro falling even further. The EUR/ JPY found support at 108.117 after the EUR/ JPY completed a second fall in price action.
Following a Fibonacci projection pattern over the last year, the EUR/ JPY may find itself in a consolidation pattern over the coming few weeks with the ceiling at 115.280 and the floor at 108.117.
Should the Euro zone find stability and push the EUR/ JPY past 115.280, then a viable target would be 119.707 where the 20 period moving average intersects with the 161.8% Fibonacci projection level, a key point sellers will be watching.
However, if 108.117 fails to hold as support and is retested as resistance, then the EUR/ JPY could fall all the way to 89.365 an extremely significant price level in which not only is this the 423.6% Fibonacci projection level, but also the lowest price point that the EUR/ JPY has been.