EUR/JPY Forecast – Euro Faces Downside Vs Japanese Yen

EUR/JPY Forecast – Euro Faces Downside Vs Japanese Yen

  • – The Euro remained under a bearish pressure vs the Japanese yen and traded below 120.50.
  • – There is a crucial bearish trend line with resistance at 120.65 formed on the 4-hours chart of EUR/JPY.
  • – The Japanese Merchandise Trade Balance Total released by the Ministry of Finance posted a trade deficit of ¥-1,086.9B in Jan 2017, more than the forecast of ¥-636.8B.

 

Japanese Merchandise Trade Balance

Today in Japan, the Merchandise Trade Balance report for Jan 2017 was released by the Ministry of Finance. The market was aligned for the balance amount between import and export to post a deficit of ¥-636.8B in Jan 2017, compared with the previous reading of ¥641.4B.

 

The result was below the forecast, as the trade deficit was ¥-1,086.9B in Jan 2017. Exports increased by 1.3% in Jan 2017, which were lower than the forecast of 4.7%. Imports were more than the forecast, and registered a rise of 8.5%, vs the +4.7% forecast. Looking at the Adjusted Merchandise Trade Balance, there was a trade surplus of ¥155.5B, less than the forecast of ¥356.7B.

 

Overall, the result not as the market expected. It gives an edge to the Euro for a short-term upside move towards 120.50 vs the Japanese yen.

 

EUR/JPY Technical Analysis

The Euro was seen struggling near 121.50 against the Japanese yen, as it represents a major resistance area. It is a confluence zone formed with three things. First, a crucial bearish trend line on the 4-hours chart of EUR/JPY. Second, the 100 simple moving average, and the last one is the 50% Fib retracement level of the last decline from the 123.30 high to 119.33 low.

 

EUR/JPY Technical Analysis Euro Yen

 

So, it is a clear hurdle for EUR/JPY. As a result, the pair failed and moved down towards 119.70 before starting a recovery. The pair is once again correcting higher, but likely to face sellers near the same trend line at 120.65.

 

Moreover, the 50% Fib retracement level of the last decline from the 121.25 high to 119.67 low is also around the same trend line resistance. So, if the pair continues to move higher, it could face sellers near 120.60 and 120.80.

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