- The Euro declined recently and tested the 126.50 area against the Japanese Yen.
- There are two important bearish trend lines in place with resistance at 128.70 on the 4-hours chart of EUR/JPY.
- The Euro Zone GDP in Q3 2018 (Preliminary) increased 0.2% (QoQ), less than the +0.4% forecast.
- Today, the Euro Zone CPI for Oct 2018 (Preliminary) will be released, which is forecasted to increase 2.2% (YoY).
EURJPY Technical Analysis
The Euro started a major downside move from well above the 131.00 level against the Japanese Yen. The EUR/JPY pair declined below the 130.00 and 129.00 support levels to enter a bearish zone.
Looking at the 4-hours chart, the pair even broke the 128.50 support level and traded close to the 126.50 region. It traded as low as 126.66 and later started an upside correction.
Buyers pushed the pair above the 38.2% Fib retracement level of the last decline from the 130.20 high to 126.66 low. However, there is a strong resistance formed near the 128.50 and 129.00 levels.
More importantly, there are two important bearish trend lines in place with resistance at 128.70 on the same chart. Besides, the 61.8% Fib retracement level of the last decline from the 130.20 high to 126.66 low is near 128.84 to act as a resistance.
If there is a break and close above 129.00, the pair could move back in a positive zone. If not, there may be a fresh decline back towards the 127.00 and 126.50 levels in the near term.
Fundamentally, the Euro Zone GDP report for Q3 2018 (Preliminary) was released by the Eurostat. The market was looking for a growth of around 0.4% compared with the previous quarter.
However, the actual result was lower than the forecast as the GDP grew 0.2% in Q3 2018. Looking at the yearly change, there was an increase of 1.7%, which was less than the 1.8% forecast and also less than the last revised reading of 2.2%.
Overall, the Euro remains under pressure and pairs like EUR/USD and EUR/JPY are likely to struggle in the near term.
Economic Releases to Watch Today
- Euro Zone CPI for Oct 2018 (YoY, Preliminary) – Forecast +2.2%, versus +2.1% previous.
- Euro Zone Core CPI for Oct 2018 (YoY, Preliminary) – Forecast +1.0%, versus +0.9% previous.
- US ADP Employment Change April 2018 – Forecast 189K, versus 230K previous.
- Canadian Gross Domestic Product for August 2018 (MoM) – Forecast +0.2%, versus 0.2% previous.