Forex Technical Update

EUR/JPY

EUR/JPY

EUR/JPY has been consolidating this week like many other euro-crosses. The 1H chart shows that the consolidation has been in an ascending triangle, where the resistance has been similar, and the support has been rising. Over the Thursday European session, there was inflation data that came out as expected (Aug CPI y/y 2.5%, July: 2.5%; Core CPI y/y: 1.2%, July: 1.2%). Employment for Q2 was also seen to have risen 0.3% in the Euro Area (EA17). Risk appetite has been back in the markets especially as Merkel and Sarkozy pledged to keep Greece in the Eurozone. Otherwise, it would have been a real blow to the existence of the Eurozone, and the Euro could be in trouble, while safe haven currencies like the USD and JPY might gain. For now, this fear is set aside, and the EUR/JPY is breaking above the ascending triangle seen in the 1H chart. With this breakout, the projection using the width of the triangle at its widest, and projecting in the direction of the breakout, we have a projection to 107.00. A slightly more conservative outlook sees resistance lower, at about 106.80, where the 200SMA resides. Also 106.90 is 50% retracement. The downside opens back up with a break below  . In the daily chart, EUR/JPY is seen in a declining channel, and starting to accelerate. The bullish outlook in the short-term is predicated on a weak pullback attempt that preferably fails to break back below 105.50. But ff the market is pushed below 105, the 100.00 level could be in sight in a more bearish continuation scenario. This requires also a break back below the current low at 103.88.

EUR/JPY

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Fan Yang CMT
Chief Technical Strategist
FXTimes