EURJPY: Chart Starts to Break Down
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EURJPY Nears Fibonacci Support
A mixture of fundamentals and technicals suggest that EURJPY may continue to move lower as the relative strength of each currency comes into focus. In brief the Euro remains under pressure as growth in the single bloc stagnates with Germany likely to just miss going into technical recession. Commentary from various central bankers suggest that fresh liquidity measures are being seriously considered and that the idea of a rate hike has been pushed further back. Italian government bond yields – a risk indicator - are pushing back towards 3% while the safe-haven German bond market is negative yielding all the way out to nine years. Against this the safe-haven Japanese Yen continues to gain strength as US China trade talks are pushed back and are unlikely before March 1, the day before tariffs on Chinese imported goods hit 25%.
On the chart, the recent recovery in EURJPY looks likely capped at the 50% Fibonacci level at 126.18 if it breaks above the 20- and 50-day moving averages between 124.90 and 125.50. The pair have just touched a new two-week low and eye the 123.35-123.50 level where the January 7 and 15 lows meet 61.8% Fibonacci retracement. A break and close below here would bring the January 2 spike low back into focus.
EURJPY Daily Price Chart (December 2017 – February 8, 2018)
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