EUR/JPY Technical Analysis: Opting to Pass on Short Position
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- EUR/JPY Technical Strategy: Flat
- Support: 136.22, 135.72, 135.04
- Resistance: 137.17, 137.57, 138.12
The Euro slid to the lowest level in a month against the Japanese Yen, marking a breach of the 137.00 figure. Near-term support is at 136.22, marked by the 61.8% Fibonacci expansion and a falling channel bottom. A break below that on a daily closing basis exposes the August 8 low at 135.72. Alternatively, a turn back above the 50% level at 137.17 clears the way for a test the channel top at 137.57.
Entering short is a very tempting proposition from the technical and risk/reward perspectives. However, the pair’s link to risk appetite trends warns against taking directional bets as minutes from September’s FOMC meeting threaten to disrupt sentiment trendsin the hours. Indeed, the correlation between EURJPY and the MSCI World Stock Index is now 0.52 on 20-day percent change studies, the highest since late July. As such, we will begrudgingly remain flat.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.