Key Highlights
- The Euro is carving a major top near 131.40 against the Japanese Yen.
- There was a break below two important bullish trend lines at 130.50 on the daily chart of EUR/JPY.
- Japan’s Machinery New orders in June 2017 declined by 1.9% (MoM) compared with the +3.7% forecast.
- The US Initial Jobless Claims for the week ending Aug 5 2017 will be released today. The forecast is of no change from the last 240K.
EURJPY Technical Analysis
The Euro surged higher in June and July 2017 against the Japanese Yen above 131.00. August 2017 seems to be a bearish month for EUR/JPY, as the pair is carving a top near 131.40.
Looking at the daily chart of EUR/JPY, there are clear bearish candles near 131.00-131.40. There was also a break below two important bullish trend lines at 130.50.
The pair has moved below the 23.6% Fib retracement level of the last wave from the 122.39 low to 131.40 high. So, there are high chances of EUR/JPY trading further lower towards 127.00.
The next major support sits at 50% Fib retracement level of the last wave from the 122.39 low to 131.40 high. There is a bullish trend line at 127.00 positioned, which might act as a support on the downside.
On the upside, the broken trend line support at 130.50 can act as a hurdle if the pair attempts a recovery in the short term.
Japan’s Machinery New Orders
Recently in Japan, the Machinery New orders for June 2017 was released by the Cabinet Office. The market was aligned for an increase of 3.7% compared with the previous month.
However, the actual result was completely opposite, as there was a decline of 1.9% in the orders. The yearly change reading was even worse, as there was a decline of 5.2% in the orders. The market forecast was 1% decline and the last reading was +0.6%.
The report added that:
Private-sector machinery orders, excluding volatile ones for ships and those from electric power companies, decreased a seasonally adjusted by 1.9% in June, and showed fell by 4.7% in April-June period.
The EUR/JPY pair remains under bearish pressure and likely to extend declines towards 128.00 or even 127.00 in the near term.
Economic Releases to Watch Today
- US Initial Jobless Claims – Forecast 240K, versus 240K previous.
- US Producer Price Index July 2017 (MoM) – Forecast +0.1%, versus +0.1% previous.
- Producer Price Index July 2017 (YoY) – Forecast +2.2%, versus +2.0% previous.
