EUR/JPY Rebound Facing Uphill Task22 May, 2019 by Aayush Jindal in Market Analysis
- The Euro tested the 122.00 support area and corrected higher against the Japanese Yen.
- EUR/JPY traded above a key bearish trend line with resistance near 122.75 on the 4-hours chart.
- The Euro Area Consumer Confidence in May 2019 (Prelim) increased from -7.3 to -6.5.
- ECB’s President Draghi speech today could impact EUR/USD and EUR/JPY.
EURJPY Technical Analysis
Earlier this month, there was a sharp decline in EUR/JPY below the 124.00 and 123.20 support levels. The Euro tested the 122.00 support area and recently started a decent rebound against the Japanese yen.
Looking at the 4-hours chart, the pair traded as low as 122.08 and settled below the 100 simple moving average (4-hours, red). It started an upward move and climbed above the 122.80 resistance and the 23.6% Fib retracement level of the drop from 125.21 to 122.08.
Moreover, the pair traded above a key bearish trend line with resistance near 122.75 on the same chart. The pair tagged the 100 SMA and the 50% Fib retracement level of the drop from 125.21 to 122.08.
If there is an upside break above the 123.80 and 124.00 resistance levels, there could a strong upward move towards the 125.00 resistance area.
Conversely, if EUR/JPY fails to move above the 124.00 resistance, there could be a fresh decline below the 123.00 support area. The next key supports are near 122.40, 122.10 and 122.00.
Fundamentally, the Euro Area Consumer Confidence report for May 2019 (Prelim) was released by the European Commission. The market was looking for a minor rise from -7.9 to -7.6.
The actual result was better than the forecast, as there was an increase to -6.5. Besides, the last reading was revised from -7.9 to -7.3.
The report added:
At −6.5 points (euro area) and −6.2 points (EU), both indicators are well above their respective long-term averages of −10.7 (euro area) and −10.0 (EU).
Overall, EUR/JPY is showing positive signs, but it must climb above the 124.00 resistance area to start a strong upward move.
Economic Releases to Watch Today
- UK Consumer Price Index April 2019 (YoY) – Forecast +2.2%, versus +1.9% previous.
- UK Core Consumer Price Index April 2019 (YoY) – Forecast +1.9%, versus +1.8% previous.
- ECB’s President Draghi Speech.