Dukascopy

EUR/JPY weakens in response to elections

FX:EURJPY   Euro / Japanese Yen
The Euro was trading in a minor consolidation phase in the 133.60/90 territory on Friday, thus demonstrating a rather uneventful ending of the week. This cannot be said about this trading session when the rate opened 22 pips higher (October high) in the wake of Abe’s convincing victory in Japan’s election during the weekend.

The Yen has since strengthened and guided the rate towards the 55-hour SMA circa 133.60. Even though technical indicators are generally bullish , they are gradually moving south.

This suggests that the downward pressure could prevail in the remaining trading hours. The bottom target could be the weekly PP and the 23.8% Fibo in the 133.20 area.

Meanwhile, the upside is guarded solely by the upper wedge boundary circa 134.05.
Comment:
Monday’s trading session was dominated by bears who pushed the rate down to the 100-hour SMA, the weekly PP and the 23.6% Fibo circa 133.20. The opposite situation was apparent during the first half of Tuesday when bulls managed to re-gain some of its lost positions and even reach the 134.00 area by mid-day.

The Euro is approaching its four-week high circa 134.40. Technical indicators demonstrate that there is still some upside potential that could be realised until the aforementioned high.

It is expected that the rate’s subsequent movement might be southward down to the 55– and 100-hour SMAs in the 133.60/40 territory. As a result, the common European currency should remain stable against the Greenback if considering daily changes in price.
Comment:
Despite showing signs of a possible reversal, the common European currency managed to edged even higher on Tuesday and reach its September high of 134.43 (the highest mark since December 2015).

This shows the magnitude of strength the Euro has gained against the Yen during this period. Thus, this week might mark a beginning of a new medium– or even long-term decline in price. In the short term, however, the rate might still test the 134.60/70 area prior to falling lower.

The closest support are the relatively distant 55– and 100-hour SMAs. Thus, there is enough potential both directions that should be realised in the next 24 hours.

By and large, it is more likely that bears start to dominate the market during this period; however, the market might be quiet prior to ECB Conference tomorrow at 1230GMT.
Comment:
The Euro was trading with low volatility since mid-Wednesday, thus remaining near its long-term high of 134.50 for several hours. The given mark was unsuccessfully re-tested early in this session.

This small trading range was eventually breached in the wake of the ECB’s statement to start cutting the bond purchase programme next year. The Euro fell 36 pips immediately after the release, as traders were expecting a more hawkish tone from the Bank.

This move resulted in the rate dashing through the 100-hour SMA and moving towards the combined support of the weekly PP, the 200-hour SMA and the 23.8% Fibonacci retracement circa 133.20.

It is likely that the rate remains pressured by bears that could push the rate down to this support. Upside target could be the aforementioned 134.50 mark.
Comment:
The massive fall of the EUR/JPY exchange rate that occurred in the wake of the ECB’s revealing its minimum bid rate remained dominant for several hours on Thursday.

As a result, the Euro dashed through the weekly PP, the 23.8% Fibo and the 200-hour SMA and eventually reached the weekly S1 circa 132.50.

The rate has subsequently failed to recover some of its losses, even despite technical indicators pointing to appreciation. It is likely that the rate reverses near this area (including the monthly PP at 132.21) and thus confirms the existence of a four-week ascending channel.

The upside target could be either the weekly PP or the 55– and 100-hour SMAs near 133.22 and 133.66, respectively.

Meanwhile, the southern part is limited only by several Fibo levels and the trend-line at 131.75.
Comment:
EUR/JPY remained steady within the first half of Friday, and it seemed that the same lack of direction would prevail until the end of the day.

However, Catalonia declaring independence put downward pressure on the common European currency. As a result, the rate breached the ascending channel and was pushed down to the 50.0% Fibonacci retracement circa 132.00.

If examining the pair from a broader perspective, it is apparent that the rate has been stranded in the 131.77/134.50 territory since mid-September. The rate failed to overcome the southern barrier late on Friday.

This suggests that the Euro might appreciate during the following trading sessions.

In the short-term, it is likely that the rate remains stranded between the weekly PP and the 55-hour SMA at 132.70 and the 131.80 mark.
Comment:
The common European currency edged slightly lower on Tuesday and consequently breached the trading range that had confined the pair for the last six weeks.

The Euro failed to fall below the 131.50 mark on two separate occasions. As a result, it has remained between this trend-line and the 50.0% Fibonacci retracement since late Monday.

The massive fall that started to dominate the market on October 26 has seemingly allayed, thus resulting in the rate fluctuating slightly below the monthly PP.

This situation points to a change in sentiment that should eventually let bulls take the upper hand. Technical indicators are gradually recovering; however, the strong resistance of the 55-hour SMA and the monthly PP could hold the rate below the latter within the upcoming 24 hours.

Comments

Hey there, just wondering where you got the weekly PP from? Thank you
Reply
Dukascopy Mustapha87
@Mustapha87, we are using traditional weekly PPs which can be found in the indicators search bar; they are called 'Pivot Points Standard'.
Reply
Mustapha87 Dukascopy
@Dukascopy, Thanks. I closed my short trade yesterday after seeing this. Saved me some losses. I think it may remain bullish
Reply
Home Stock Screener Forex Screener Crypto Screener Economic Calendar How It Works Chart Features Pricing Refer a friend House Rules Help Center Website & Broker Solutions Widgets Charting Solutions Lightweight Charting Library Blog & News Twitter
Profile Profile Settings Account and Billing Referred friends Coins My Support Tickets Help Center Ideas Published Followers Following Private Messages Chat Sign Out