EURJPY – Can It Recover as Sellers Remain in Action?

Key Highlights            

  • Euro traded lower against the Japanese Yen, and tested the 127.00 support area.
  • There is a major bearish trend line formed on the 4-hours chart, which is likely to act as a resistance if the EURJPY pair corrects higher.
  • Japanese Labor Cash Earnings released by the Ministry of Health, Labor and Welfare posted no change in November 2015, compared with the forecast of 0.7%.
  • Japanese Foreign-exchange reserves, released by Ministry of Finance came in at $1,233.2B, unchanged from the last reading.

EURJPY Technical Analysis

The Euro struggled a lot not only against the US Dollar recently, but also against the Japanese Yen. The EURJPY pair traded lower and even broke the 128.00 support area to trade towards 127.00. A new weekly low was formed near 126.79 where buyers fought to prevent the downside move.

EURJPY

There is a monster bearish trend line formed on the 4-hours chart, which is acting as a hurdle and preventing gains. If the pair manages to correct higher from the current levels, then an initial resistance is around the 50% fib retracement level of the last drop from the 132.45 high to 126.79 low.

However, the most important one is around the trend line, as it is coinciding with the 100 and 200 simple moving average on the 4-hours chart. On the downside, a break below the recent low may call for more losses.

Japanese Labor Cash Earnings

Today, there were a couple of minor releases in Japan. The Japanese Labor Cash Earnings, which shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses was released by the Ministry of Health, Labor and Welfare. The market was expecting an increase of 0.7% in November 2015, compared with the same month a year ago. However, the result was disappointing, as the cash earnings remain unchanged in November 2015.

Moreover, the Foreign-exchange reserves, which in a strict sense are ‘only’ the foreign currency deposits and bonds held by central banks and monetary authorities  was released by Ministry of Finance. The reading was again unchanged from the last one and came in at $1,233.2B in December 2015.

Overall, the reports failed to help the Japanese Yen, and in turn helping the EURJPY pair to recover some ground. Let us see how far the pair can climb in the current leg higher.



Mar