MO EURJPY – 11.12.18
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MO EURJPY – 11.12.18

Long Term Overview:

Economic Analysis

We have seen some recent strengthening of Japanese industrial production however deflationary factors and Average Cash Earnings remain a significant concern within the Japanese economy, as a result, these ongoing depreciation factors within the Japanese economy may combine to see a continued drop in the JPY long term. However, these factors may bee overshadowed by a return to strong GDP growth as seen in the Q2 data, but before this can be accounted for the market will want to see confirmation of this trend within japans advanced Q3 GDP growth data.

 

In recent weeks the market has seen Euro Zone bond yields reassert themselves as a major influencing factor in terms of EUR stability. With ongoing Italian budget negotiations likely to continue to destabilise the EUR in the near term. With recent Brexit negotiations are looking none favourable for the Euro, with a discrepancy between the EU and Britain over Prime Minster May’s post-Brexit immigration plan.

 

With the next round of Japanese GDP data not published until November JPY strength may be limited in the near term. However, given the expected level of uncertainty within the Euro Zone over the same period the JPY may be the stronger currency within the pair.

Long Term Analysis

The EURJPY is in a 5-year bearish channel. Price has been in its upper bearish tripwire area, where since then the Sellers have pushed price to the short side. However, the Euro/Yen has been moving sideways into the EMAs for 7 months now; using the Monthly 21EMA as its equilibrium point. As price is in the key resistance area, this market may see a further upsurge in Sellers and push price down to previous lows nearing the 124.62 area, in the next couple of months

 

 

Decision Point: Break through and close outside of the bearish tripwire area

Long Term Trend: Short

Channel Range: Descending: 2300pips

Possible Bias: Short

Medium Term Analysis

The Medium-Term bias for the EURJPY is bearish, with price breaking out of its upper bearish tripwire area. The previous weeks candlestick formed a bearish close below the Weekly 50EMA; creating an increased amount of resistance above price. The current formation of a shooting star candlestick also suggests bearish pressure around this area. The discrepancy between the EU and Britain over Brexit negotiations and ongoing domestic economic issues within the Euro Zone remain unfavourable for the Euro in the Medium Term. With these factors in mind, Price may fall short to previous lows nearing the 126.71 area, in the next couple of weeks.

 

 

Decision Point: Pullback into previous highs nearing the 129.45 area.

Long Term Trend: Short

Channel Range: Descending: 2300pips

Possible Bias: Short