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EUR/JPY Technical Analysis: Four-Month Support Under Fire

EUR/JPY Technical Analysis: Four-Month Support Under Fire

Ilya Spivak,

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Talking Points:

  • EUR/JPY Technical Strategy: Flat
  • Euro Drops to Lowest Level in 4 Months, Threatens Key Support
  • Opting to Wait for Confirmation of Break Before Entering Short

The Euro came under renewed selling pressure against the Japanese Yen, dropping to the lowest level in over four months. The pair now finds itself at a pivotal juncture, with prices testing below support that has capped losses since early May.

A daily close below the 133.07-30 area marked by the aforementioned horizontal pivot and the 76.4% Fibonacci expansion initially opens the door for a test of the 100% level at 131.24. Alternatively, a reversal back above the 61.8% Fib at 134.20 clears the way for a test of resistance-turned-support at 135.11, the 50% expansion.

Risk/reward considerations argue against trying to chase the pair lower. A break below support remains inconclusive absent confirmation on a daily closing basis, with a swift reversal higher a discrete possibility if risk trends firm on the back of the upcoming US jobs report. With that in mind, we will continue to stand aside and wait for a more compelling opportunity to present itself.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.