EUR/JPY Likely Formed Short-term Top

Key Highlights

  • The Euro found a strong selling interest near 132.00 and declined against the Japanese Yen.
  • There was a break below a major bullish trend line with support at 131.80 on the 4-hours chart of EUR/JPY.
  • The Euro Zone CPI increased 0.1% in June 2018 (MoM), less than the last +0.5%.
  • Today in the UK, the Retail Sales figure for June 2018 will be released, which is forecasted to rise 0.4% (MoM).

EURJPY Technical Analysis

The Euro was in a significant uptrend this past week with a break above 130.00 against the Japanese Yen. The EUR/JPY pair climbed towards 132.00, which acted as a strong resistance.

EURJPY Technical Analysis Euro Japanese Yen

Looking at the 4-hours chart, the pair formed a short-term top at 131.98 and started a downward move. It broke the 23.6% Fib retracement level of the last wave from the 129.90 low to 131.98 high.

More importantly, there was a break below a major bullish trend line with support at 131.80 on the same chart. The current price action suggests that there could be more declines in EUR/JPY below the 131.00 level.

The next major support is near the 61.8% Fib retracement level of the last wave from the 129.90 low to 131.98 high at 1.3070. On the upside, the previous support at 131.50 and 131.80 are likely to act as hurdles. Above these, the pair has to move above 132.00 to start a fresh rally.

Recently in the Euro Zone, the CPI report for June 2018 was released by Eurostat. The market was looking for a rise of 0.1% in the CPI compared with the previous month.

The result was in line with the forecast, but it was much lower than the last increase of 0.5%. Moreover, the Core CPI remained flat in June 2018, whereas the market was looking for a rise of 0.1%.

Euro Zone CPI June 2018

The report added:

In June 2018, the highest contribution to the annual euro area inflation rate came from energy (+0.76 percentage points, pp), followed by services (+0.57 pp), food, alcohol & tobacco (+0.53 pp) and non-energy industrial goods (+0.10 pp).

Overall, the Euro may continue to face selling interest in the near term against the US Dollar and Japanese Yen.

Economic Releases to Watch Today

  • US Initial Jobless Claims – Forecast 220K, versus 214K previous.
  • UK Retail Sales for June 2018 (YoY) – Forecast +3.9%, versus +3.9% previous.
  • UK Retail Sales for June 2018 (MoM) – Forecast +0.3%, versus +1.4% previous.
  • UK Retail Sales ex-fuel for June 2018 (YoY) – Forecast +3.7% versus +4.4% previous.
  • UK Retail Sales ex-fuel or June 2018 (MoM) – Forecast +0.3% versus +1.3% previous.


Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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