EURJPY Uptrend Correction (May 17, 2017)

EURJPY is still trending higher and has recently broken past the resistance at the 124.50 minor psychological level. Price zoomed up close to the 126.00 resistance from there but could be due for a pullback before posting more gains.

Applying the Fibonacci retracement tool on the latest swing low and high reveals that the 61.8% retracement level lines up with the broken resistance that might now hold as support. The 100 SMA is above the 200 SMA to suggest that the uptrend could continue and is also close to the area of interest.

Stochastic is indicating oversold conditions so buyers could take over soon. A shallow correction could find support at the 38.2% Fib or 125.00 handle while a larger correction could last until the rising trend line support.

Euro zone economic data turned out mixed, with the region’s flash GDP coming in line with expectations of 0.5% growth and Germany’s ZEW economic sentiment posting a weaker than expected climb from 19.5 to 20.6 versus the consensus at 22.3. Euro zone trade balance and the region’s ZEW index came in better than expected.

In Japan, core machinery orders posted a meager 1.4% gain versus the projected 2.6% jump. Revised industrial production data is due next and no change from the preliminary 0.5% uptick is eyed.

Market sentiment and US bond yields appear to be influencing yen price action as well, with the latest national security issues in the Trump administration dampening demand for the dollar and keeping the yen supported. However, the North Korea situation remains an issue and could weaken support for JPY as well.

By Kate Curtis from Trader’s Way