- Our study on EUR/JPY weekly charts shows the pair has been trending sideways since Sept.
- Upside remains capped below 61.8% Fib retrace of 109.205 to 149.787 rally at 134.28.
- We evidence a 'Bearish Bat' harmonic pattern on the weekly charts which raises scope for downside.
- The pair is currently holding 20W SMA support at 131.50, break below will see further weakness.
- We also note bearish divergence on RSI and Stochastics which supports our bearish bias.
- We see drag till 38.2% Fib at 124.70 likely on a decisive break below 20W SMA.
- Wednesday’s upbeat German Prelim CPI report continues to underpin the sentiment around the Euro. Focus now on the Eurozone flash CPI report due later today in the EU session.
- We see some upside potential on daily charts. Aggressive players could opt to go short on rallies with tight stop loss.
- For a medium-term outlook we recommend a short on break below 131.50 (100W SMA), targeting 130/ 127.60/ 127/ 126/ 125/ 124.70.
- On the flipside, breakout at 61.8% Fib at 134.28 to see bearish invalidation.
FxWirePro Currency Strength Index: FxWirePro's Hourly EUR Spot Index was at 19.2742 (Neutral), while Hourly JPY Spot Index was at -71.844 (Neutral) at 0500 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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