EURJPY has been on a long-term downtrend, moving below a descending trend line on its daily time frame. Price looks ready for another test of the resistance area, which is around the Fib levels based on the latest swing high and low.
In particular, the 61.8% level lines up with the trend line around 129.00 and the 100 SMA. This short-term moving average is below the longer-term 200 SMA, confirming that the downtrend could carry on as the path of least resistance is to the downside.
In addition, stochastic is already indicating overbought conditions, which means that euro bulls are exhausted. RSI is on the move up and hasn’t quite reached the overbought level just yet so there may be some buying pressure left before sellers are able to take over. If the trend line keeps gains in check, price could fall back to the previous lows at 122.00.
A number of medium-tier reports are lined up from the euro zone today. These include the German retail sales, French consumer spending, French preliminary CPI and Spanish flash CPI. Strong data could lead to more gains for the euro while weak results could allow the downtrend to resume.
As for Japan, only the housing starts data is due soon while the Tankan survey results are lined up for the next Asian trading session. Data from Japan has been mixed recently, as household spending beat expectations while retail sales and preliminary industrial production have fallen short.
By Kate Curtis from Trader’s Way