EURJPY has formed lower highs and lower lows, creating a falling wedge pattern on its 4-hour time frame. Price just bounced off support and could be due for a test of resistance soon.
This resistance area lines up with a broken short-term support level around 122.75, which might now hold as resistance. It is also near the moving averages or dynamic inflection points. In addition, the 100 SMA is below the 200 SMA so the path of least resistance is still to the downside.
Stochastic is on the move up so euro bulls are in control of price action for now, likely taking EURJPY up to the wedge resistance. Similarly, RSI is heading north so EURJPY could follow suit. An upside breakout past 123.00, however, could be a sign that an uptrend is about to take place.
Data from the euro zone came in mixed yesterday, as the region’s retail PMI climbed from 47.9 to 50.6 to indicate industry expansion. However, German factory orders fell short of expectations with a 2.0% slide versus the projected 0.4% drop.
There are no major reports out from Japan today, leaving risk sentiment in play. The country’s current account balance, final GDP reading, and Economy Watchers Sentiment index are up for release in the next Asian session.
As for the euro, German industrial production and French trade balance numbers are on today’s docket. French non-farm payrolls and German trade balance data are lined up for Thursday. Apart from these, Brexit concerns also appear to be weighing on the shared currency.
By Kate Curtis from Trader’s Way