EURJPY is still trading inside its shallow descending channel visible on the 4-hour time frame and is making its way back down to support at 131.50. A bounce from this area could take it back up to the resistance around 134.00.
The 100 SMA is crossing above the longer-term 200 SMA to signal that the path of least resistance is to the upside, which suggests that support is more likely to hold than to break. Stochastic is already indicating oversold conditions, so sellers could use a break and let buyers take over.
Medium-tier reports from the euro zone have been upbeat in the latest session, with German factory orders rising by 0.5% instead of posting the projected 0.2% fall and the region’s retail PMI improving from 51.1 to 52.4.
The yen has been able to rake in gains as risk aversion extended its stay in the financial markets, mostly owing to geopolitical risk. There were no reports out of Japan yesterday and today has the leading indicators due.
As for the euro zone, German industrial production and French trade balance are lined up, just ahead of the revised GDP release. Stronger than expected data could keep the shared currency afloat but disappointing figures could lead to more losses.
By Kate Curtis from Trader’s Way