EUR/JPY Testing Crucial Support Near 126.3006 March, 2019 by Aayush Jindal in Market Analysis
- The Euro climbed towards 127.50 before starting a downside correction against the Japanese Yen.
- A key bullish trend line is in place with support at 126.30 on the 4-hours chart of EUR/JPY.
- The Euro Area Retail Sales increased 1.3% (MoM) in Jan 2019, better than the +1.2% forecast.
- The US ADP Employment figure for Feb 2019 will be released today, which could change 189K.
EURJPY Technical Analysis
The Euro climbed higher steadily in the past four weeks and broke the 126.00 resistance against the Japanese Yen. The EUR/JPY pair tested the 127.50 level and later started a downside correction.
Looking at the 4-hours chart, the pair placed itself above the key 126.30 resistance and surged towards the 127.50 level. A high was formed at 127.49 and later the pair corrected below the 127.20 support.
There was a break below the 127.00 support and the 61.8% Fib retracement level of the last wave from the 125.88 low to 127.49 high. However, the 126.30 level acted as a strong support and prevented further declines.
There is also a key bullish trend line is in place with support at 126.30. Therefore, there is a crucial support in place near 126.30, below which the pair could turn bearish in the near term.
If the pair stays above 126.30 and climbs higher, it is likely to trade above the 127.20 resistance. The next key resistances are near 127.50 and 128.00.
Fundamentally, the Euro Area Retail Sales report for Jan 2019 was released recently. The market was looking for a 1.2% increase in sales in Jan 2019, compared with the previous month.
The result was better than the forecast as there was a 1.3% rise in sales, which was a lot better than the last decline of 1.4%. The yearly change was +2.2%, much better than the last +0.3%.
The report added that:
The volume of retail trade increased by 1.7% for non-food products, by 1.6% for automotive fuel and by 0.6% for food, drinks and tobacco in January2019, compared with December 2018.
The outcome helped the EUR/JPY pair in the short term, but it must gain momentum above the 127.20 resistance to start a fresh upward move.
Economic Releases to Watch Today
- US ADP Employment Change Feb 2019 – Forecast 189K, versus 213K previous.
- US Trade Balance Dec 2018 – Forecast $-57.0B, versus $-49.3B previous.
- BoC Interest Rate Decision – Forecast 1.75%, versus 1.75% previous.