EUR vs JPY Technical Outlook
EUR/JPY Price- Interrupted Rally
On Wednesday, EUR/JPY rallied to a two-week high at 121.48 and retreated after as some bulls seemed to cut back. Nevertheless, the weekly candlestick closed in the green with a 0.5% gain.
The Japanese Yen fell due to the risk-on sentiment driven by the central bank's stimulus around the globe combined with the recent positive economic data yet, the prospect of a second wave of coronavirus kept demand on safe-haven currencies intact.
EUR/JPY Daily PRice CHART (Sep 1, 2018 – JuLY 6, 2020) Zoomed Out
EUR/JPY Daily Price CHART (March 2 – JuLY 6, 2020) Zoomed in
In mid-June, EUR/JPY corrected its upward trend and started a sideways move creating lower highs with higher lows. Last week, the price failed on multiple occasions to rally to the higher trading zone reflecting the bull’s hesitation at this point.
With that said, any successful close above the high end of the current trading zone 119.63 -121.48 signals that bulls could steer EURJPY towards 124.10. A further close above that level may encourage bulls to extend the rally towards 127.55.
On the flip side, a close below the high end of the zone would mean more of the sideways move ie, it may cause a fall towards the low end of it. A further close below that level could embolden bears to press towards 116.89.
EUR/JPY Four Hour Price CHART (May 22– JuLY 6, 2020)
Last week, EUR/JPY rallied above the lower line on the downtrend lines fan originated from the June 16 high at 122.11 and generated a bullish signal. Today, the price has broken above the higher line on the same fan and generated another bullish signal. Nonetheless, any break below the uptrend line originated from the May 22 low would generate a bearish signal.
To conclude, a break above 122.48 may trigger a rally towards the 123.40, while a break below 120.75 could send EURJPY towards 119.90. Yet, the daily support and resistance levels underlined on the four-hour chart should be considered.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
