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Euro Might Correct Lower Vs Japanese Yen

Key Highlights

  • The Euro surged higher this week and traded as high as 134.17 against the Japanese Yen.
  • There is an important ascending channel forming with support at 133.65 on the 4-hours chart of EUR/JPY.
  • Germany’s Producer Price Index in August 2017 rose 0.2% (MoM), more than the forecast of 0.1%.
  • Japan’s Total Merchandise Trade Balance in August 2017 posted a trade surplus of ¥113.6B, more than the forecast of ¥93.9B.

EURJPY Technical Analysis

The Euro made good ground this week and moved above the 134.00 level against the Japanese Yen. The EUR/JPY pair traded as high as 134.17 and is currently correcting lower.

The current uptrend is supported by an important ascending channel with support at 133.65 on the 4-hours chart. Below the channel support at 133.65, the 23.6% Fib retracement level of the last wave from the 130.60 low to 134.17 high is a crucial support at 133.33.

If the pair breaks the channel support, it could test the 133.30 support area. Should there be a break below 133.30, the pair could test the 50% Fib retracement level of the last wave from the 130.60 low to 134.17 high at 132.40.

On the upside, the channel resistance is at 134.30. A push above the recent high at 134.17 is needed for further gains towards 134.50 in the near term. Alternatively, if the pair fails to hold 133.65, there can be an extended correction.

Germany’s Producer Price Index

Today in the Euro Zone, the Producer Price Index for August 2017 was released by the Statistisches Bundesamt Deutschland. The forecast was slated for a rise of 0.1% in the PPI compared with the previous month.

However, the actual result was above the forecast, as the PPI in August 2017 increased 0.2%. Looking at the yearly change, there was an increase of 2.6%, more than the forecast of 2.5% and higher than the last +2.3%.

The report added:

In August 2017 the price indices of all main industrial groups increased compared with August 2016: Prices of non-durable consumer goods rose by 3.6%, prices of intermediate goods by 3.3%. Energy prices rose by 2.7%, though the development of prices of the different energy carriers diverged.

Overall, the market sentiment is positive for EUR/JPY, but it has to stay above 133.30 to remain in the bullish zone.

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