Euro- Japanese Yen (EUR/JPY)

EUR/JPY Analysis and Outlook

Euro - Japanese Yen (EUR/JPY Analysis)

(Please refer daily currency charts and not short-term charts e.g. hourly charts. All technical analysis indicators for the weekly EUR/JPY outlook are based on the daily forex charts and in some cases 4-hourly charts. The trading strategies and forecast is based on the technical and fundamental outlook.)

Euro - Japanese Yen (EUR/JPY) Forecast:


Previous Outlook of EUR/JPY:

“The recent support at 100.43 showed the support of the psychological barrier of 100.00. On the downside even if this recent support is broken, we would expect a stronger support near 100.15/100.20 support zone. On the upside a break over 102.15 and more specifically 102.52 is required to indicate that the downward consolidation is over and another test of 104.59 can be expected.”

EUR/JPY Outlook For This Week:

Please check the relative strengths of recent economic releases and technical indications at following links as the base of this week's forecast of EUR/JPY. We recommend to check the economic strength meter on Fundamental Outlook page.
EUR/JPY Fundamental OutlookEUR/JPY Technical Outlook

Euro-Japanese Yen (EUR/JPY), initially moved to 100.33 and found very strong support there i.e. just above the support zone mentioned by us during the last week (quoted above). The currency pair then jumped up strongly to 103.99 before closing for the week at 103.60.

On one side the strong upward move indicates the possibilities of further gains but on the other side it can be very well attributed to the psychological support of 100.00. The move was similar to the previous move from the low of 100.15 during the last month i.e. October. The current price is in the strong resistance zone which has been in place since September 17th i.e. past 2 months and that also will keep our outlook neutral initially. The overall situation and uncertainties in Europe also adds to this view.

Apart from the above reasons, the current price level is sensitive to the following resistance also:

1) Approaching 105.00 psychological resistance.
2) The resistance of 61.8% retracement of the downward move during March 21st to July 24th. Please check this weekly chart of EUR/JPY.
3) The price action is at the resistance level of the mid-term price action channel. Please check this weekly EUR/JPY chart.

Considering the above facts, initially we can see some downward consolidation. On the downside support is expected in the range of 102.05/102.15. This zone represents the combination of two supports. One the current 55-day EMA and also the lower edge support of daily Ichimoku cloud. Please check the technical outlook page to see the current Ichimoku cloud situation.

If the above mentioned supports hold and a break over 104.00 takes place then EUR/JPY should try to retest 104.59 of October 22nd.On the upside any decisive break of 104.59/104.60 should target the psychological 105.00. Above 105.00, resistance should come near 105.30 as that will represent 38.2% retracement of the downward move during April 10, 2011 and July 22, 2012. Any break of that and any sustained price action over 105.00 should target 106.20/106.60 resistance zone.

Overall EUR/JPY is caught between the psychological levels of 100.00 and 105.00. It's a big range of 500 pip but till a decisive break on either side does not take place, we would not expect any real directional movement for the currency pair. On fundamental level also the situations in Europe as well as Japan are not promising and hence those too keep the overall outlook neutral.

On the downside if EUR/JPY breaks below 102.05/102.00 and sustains there then a retest of the recent 100.33 cannot be ignored. The weekly MACD stays above the signal line bullishly bit there has been a clear drop in the momentum as mentioned on the weekly technical analysis outlook page (link above).
Longer-term outlook:

We have commented about our near-term outlook above but as far as overall outlook is concerned it stays bearish. The recent upward gains have not even completed the 38.2% retracement of the downward move during April 10, 2011 and July 22, 2012 and we are still taking the recent upward gains as a consolidation in the longer perspective.

EUR/JPY Trading Strategies:

As mentioned above, initially our outlook for EUR/JPY stays neutral. We expect some downward consolidation and may go for long position near the mentioned support levels. Any position will be short-term and with reasonable position sizing considering the rapidly changing sentiments in the Euro zone economy.

You may also check the analysis updates in the Forex blog and Forex Forum.
(Please join the News Letter to get email alerts when the Forex analysis for EUR/JPY is updated. You may also share and check any real time EUR/JPY Trades in the Forex Forum and also the current EURJPY market sentiments.

For short term Forex trades, please refer to daily technical analysis for Euro/Japanese Yen at EUR/JPY Daily Analysis.

There can also be some news or some indications from technical indicators or chart patters which may suggest some major moves. Please check and share such observations about about EUR-JPY and other currency pairs in the Forex Forum Alerts.

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