Key Highlights
- The Euro is in a major downtrend with a key resistance at 131.50 against the Japanese Yen.
- There are two important bearish trend lines forming with resistance near 131.30-50 on the 4-hours chart of EUR/JPY.
- The Euro Zone Services PMI for Feb 2018 posted a decline from the last reading of 56.7 to 56.2.
- The US Factory orders figure for Jan 2018 will be released today, which is forecasted to decline by 1.3% (MoM).
EURJPY Technical Analysis
The Euro declined heavily during the past few days and moved below the 132.00 support against the Japanese Yen. The EUR/JPY pair is currently attempting a recovery, and it must break 131.50 to move into a positive zone.
The pair recently traded as low as 129.35 and is currently correcting higher. It already corrected higher substantially, but it is facing sellers on the upside near the 131.40 and 131.50 levels.
Looking at the 4-hours chart, there is a clear downtrend in place from the 137.00 swing high. The pair broke a couple of important support levels such as 135.00 and 132.00.
On the upside, there are two important bearish trend lines forming with resistance near 131.30-50 on the 4-hours chart. Moreover, the pair is well below the 100 simple moving average (red, 4-hour) and 132.00.
There can be an upside correction, but the pair may face resistance near the trend lines and the 76.4% Fib retracement level of the last decline from the 132.18 high to 129.35 low. Once there is a close above 131.50, the pair may move into a bullish zone.
On the downside, a break below the recent low of 129.35 could ignite further declines toward the 128.50 level.
Recently, the Euro Zone saw the release of the Services PMI for Feb 2018. The market was looking for no change in the PMI from 56.7. However, there was a minor decline from the last reading of 56.7 to 56.2.
Commenting on the report, the Chief Business Economist at IHS Markit, Chris Williamson, stated:
The eurozone economy looks to have hit a speed bump in February after a stellar start to the year. It’s too early to read too much into the February fall in the PMI, and some pull-back from January’s high was always on the cards.
It seems like the recent gains in the Japanese Yen may continue to weigh on EUR/JPY. Only a close above the 131.50 resistance could clear the path for a recovery.
