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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 137.65-83, 136.93, 136.58
- Resistance: 138.32, 138.75, 139.27
The Euro is attempting to renew its downtrend against the Japanese Yen, with prices moving to challenge the mid-June swing bottom. Near-term support is in the 137.65-83 area, marked by the 23.6% Fibonacci expansion and the June 12 low. A daily close below that initially exposes the 38.2% level at 136.93, a threshold bolstered by a falling channel bottom at 136.58. Alternatively, a turn back above the trend line – now recast as resistance at 138.32 – opens the door for a move to the July 9 high at 138.75.
Risk/reward considerations argue against entering short with prices trading in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
