- EUR/JPY accelerated above 125.00 and traded to a new multi-month high above 126.00.
- A crucial ascending channel is forming with support near 124.90 on the 4-hours chart.
- The US CPI increased 1% in July 2020 (YoY), more than the 0.8% forecast.
- The German CPI could decline 0.1% in July 2020 (YoY).
EUR/JPY Technical Analysis
In the past few days, the Euro followed a strong bullish path above the 124.00 level against the Japanese Yen. EUR/JPY even surpassed the 125.00 barrier and traded to a new yearly high.
Looking at the 4-hours chart, the pair remained in a nice uptrend and recently surged above the last swing high at 125.58. The pair even surpassed the 126.00 level, plus the 1.236 Fib extension level of the downward move from the 125.86 high to 124.31 swing low.
It seems like the pair might continue to rise above the 126.50 and 126.60 levels. The next major resistance could be near the 127.20 level.
On the downside, there are many supports, starting with 125.40. There is also a crucial ascending channel forming with support near 124.90 on the same chart. Below the trend line, the 100 simple moving average (red, 4-hours) is likely to provide support near 124.40.
Any further losses below the 100 SMA could accelerate the decline towards the 124.00 support level in the near term.
Fundamentally, the US Consumer Price Index for July 2020 was released yesterday by the US Bureau of Labor Statistics. The market was looking for a 0.8% rise in the CPI compared with the same month a year ago.
However, the actual result was above the market forecast, as the US CPI increased 1%. The monthly change in July 2020 was 0.6%, more than the 0.2% market forecast.
Looking at EUR/USD, the pair remained stable above the main 1.1700 support area. Conversely, there was a sharp drop in gold price below $2,000 and the price traded close to the $1,850 mark.
Upcoming Economic Releases
- German Consumer Price Index July 2020 (YoY) – Forecast -0.1%, versus -0.1% previous.
- German Consumer Price Index July 2020 (MoM) – Forecast -0.5%, versus -0.5% previous.
- US Initial Jobless Claims – Forecast 1,120K, versus 1,186K previous.