EURJPY has been on a strong selloff mode and may be ready to resume its forex trend if this corrective wave is over. Price has recently pulled up to the trend line, after breaking below the support area at the 138.00 major psychological level.
Using the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level lines up with the trend line and the broken support zone. If this area holds as resistance, the impulse wave could take EURJPY back down its it recent lows near 136.50 or even lower as the forex trend carries on.
Stochastic is already moving down from the overbought area, indicating that bears are ready to push the pair down. Price could sell off from its current levels until 136.25.
EURJPY Forex Trend
Take note though that an upside breakout might still be possible, as price is making a bullish flag right on the trend line. A rally past the 138.00 mark could be a sign that a new forex trend is in the cards and that a reversal from the previous downtrend will take place.
Data from the euro zone has been surprisingly stronger than expected recently, as Germany showed a higher than expected increase in retail sales and a larger than expected drop in joblessness. Euro zone headline CPI estimates have been revised down from 0.5% to 0.4% but the core CPI forecast was maintained at 0.8%.
As for Japan, data has been very weak, particularly in retail sales, employment, industrial production, and average hourly earnings. Although household spending and housing starts came in better than expected, both reports still printed declines. This could be a sign that the tax hike continued to weigh on economic activity even as the BOJ says that the economy will stay resilient.
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