EUR/JPY Weekly Outlook

EUR/JPY dived further to as low as 147.56 last week, breaking key medium term support of 149.27 but rebounded strongly to close the week just slightly lower. Touching of 153.57 resistance indicates that a short term low is in place with bullish convergence condition in 4 hours MACD and RSI. Further rebound could be seen this week to 38.2% retracement of 169.96 to 147.56 at 155.12. However, upside should be limited by 161.38 cluster resistance (61.8% retracement at 161.40) and bring fall resumption.

In the bigger picture, sustained trading below the long term rising channel added strong evidence that whole up trend from 88.97 (00 low) has completed, with bearish divergence conditions in weekly MACD and RSI and with monthly MACD remains below signal line. Break of 149.27 provides further credence too. Hence, while some corrective rebound might be seen, the fall from 169.96 is expected to extend further, to 8.2% retracement of 88.97 to 169.96 at 139.02 first. On the upside, firm break of 161.38 cluster resistance is needed to indicate fall from 169.96 has completed and invalidate the above view. Otherwise, medium term outlook now remains bearish.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box