EUR/JPY: Downsides Remain Limited Below 131.5012 April, 2018 by Aayush Jindal in Market Analysis
- The Euro is trading in a positive zone above the 131.50 pivot level against the Japanese Yen.
- There is a crucial bullish trend line forming with support at 131.60 on the 4-hours chart of EUR/JPY.
- The US Consumer Price Index in March 2018 increased 2.4% (YoY), more than the last +2.2%.
- Today, the ECB Monetary Policy Meeting Account will be released, which could impact the Euro in the short term.
EURJPY Technical Analysis
The Euro started a solid upside wave from the 130.20 low against the Japanese Yen. The EUR/JPY pair traded as high as 132.61 and it is currently correcting lower.
Looking at the 4-hours chart, there was an upside break above a bearish trend line at 131.15. The pair surged above 132.00, traded as high as 132.61 before starting a downside correction.
It is close to the 23.6% Fib retracement level of the last wave from the 130.23 low to 132.61 high. However, there are many supports on the downside near the 131.50-70 zone.
There is also a crucial bullish trend line forming with support at 131.60 on the 4-hours chart. The same trend line is above the 50% Fib retracement level of the last wave from the 130.23 low to 132.61 high.
Therefore, the 131.5-70 support zone holds a lot of importance. As long as the pair is above 131.50, downsides remain limited. On the upside, the pair must settle above 132.50 for a bullish acceleration in the near term.
Recently in the US, the Consumer Price Index for March 2018 was released by the US Bureau of Labor Statistics. The market was positioned for rise of 2.4% in the CPI in March 2018 compared with the same month a year ago.
The actual result similar to the forecast, which means the CPI in March 2018 was better than the last reading of 2.2%. In terms of the monthly change, there was a decline of 0.1%, whereas the market was looking for no change.
The report added that:
A decline in the gasoline index more than outweighed increases in the indexes for shelter, medical care, and food to result in the slight seasonally adjusted decline in the all items index. The energy index fell sharply due mainly to the 4.9-percent decrease in the gasoline index. The index for food rose 0.1 percent over the month, with the indexes for food at home and food away from home both increasing.
The US Dollar declined initially, but it later started an upside move. EUR/USD and GBP/USD were seen correcting lower in the short term.
Economic Releases to Watch Today
- Euro Zone Industrial Production for Feb 2018 (MoM) – Forecast +0.1%, versus -1.0% previous.
- ECB Monetary Policy Meeting Account.
- US Initial Jobless Claims – Forecast 230K, versus 242K previous.