Key Highlights
- The Euro found support near 127.50 and recovered recently against the Japanese Yen.
- There is a major breakout pattern formed with resistance at 128.85 on the 4-hours chart of EUR/JPY.
- The US Housing Starts Change came in at +1.5% in Oct 2018, better than the +0.5% forecast.
- Today, the US Durable Goods Orders for Oct 2018 will be released, which is forecasted to decline 2.5%.
EURJPY Technical Analysis
After a major decline, the Euro found support near 127.50 against the Japanese Yen. The EUR/JPY pair recovered above 128.00 and 128.50, but it faced a strong resistance near the 129.00 zone.
Looking at the 4-hours chart, the pair gained traction above the 128.00 resistance and traded above the 100 simple moving average (red, 4-hours). The upside move was positive since the pair broke the key 128.80 resistance.
There was also a break below the 50% Fib retracement level of the last decline from the 130.14 high to 127.49 low. However, the upside move was capped by 129.00 and a connecting bearish trend line.
At the outset, it seems like there is a major breakout pattern formed with resistance at 128.85 on the same chart. Therefore, the pair could either break above 129.00 or decline towards 127.50 in the near term.
Above 129.00, the pair could trade towards 129.50 and the 76.4% Fib retracement level of the last decline from the 130.14 high to 127.49 low. Above 129.50, buyers could push the pair towards 130.00.
Alternatively, if the pair fails to clear the 129.00 resistance, it could decline back towards the 127.50 support area. Further below 127.50, the next major main support is near the 126.80 level.
Looking at major pairs, EUR/USD struggled to clear the 1.1450-70 resistance area and GBP/USD is still trading below the key 1.2900 resistance area.
Economic Releases to Watch Today
- US Initial Jobless Claims – Forecast 2153K, versus 216K previous.
- US Existing Home Sales for Oct 2018 (MoM) – Forecast +1.0% versus -3.4% previous.
- US Durable Goods Orders for Oct 2018 – Forecast -2.5% versus +0.8% previous.
