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4 Oct 2013
EUR/JPY, is it reversing? On corrective 132.40 channel
FXstreet.com (Chicago) - EUR/JPY found grounds after falling from 133 zone. Ahead of Tokyo’s opening and the BoJ decision, the pair cruises on corrective price movement around the 132.40 zone.
Empirical facts
General expectations are an unchanged rate in interest rates in Japan after improving results seen after monetary policy to boost the economy and reemerge form crisis. Kathy Lien from FX Strategy says “The central bank is comfortable and confident about the strength of the recovery and their positive sentiment is validated by the recent Quarterly Tankan report which rose to its strongest level since 2008. Some economists fear that the BoJ is overly optimistic but data has been good. The latest services PMI business activity index rose to 53 in September from 51.2, a sign of continued recovery. Right now, the Japanese economy can do with its current level of stimulus but if Prime Minister Abe raises the consumption tax in April without cutting corporate taxes, the Bank of Japan may have to sweep in with another round of stimulus.” Earlier in Europe, the Markit series beat expectations indicating a possible take off, supported by stronger retail sales data and both Italy and France’s pulling-off of positive Markit Services PMIs.
EUR/JPY Technical levels
Technically speaking, the pair extends a gradual climb that originated last July 19th. Despite slow growth, the pair prints progressive higher lows and highs finally rising above the 134 zone earlier this week. Finding supports around the 131.43 zone (October 2nd lows), the pair bounces back up to consolidate around 132.43. The primary trend seems reversing for downfall but the secondary one remains facing up. On the downside, supports are aligned at 132.22 (September 16th highs), 131.83 (September 18th highs), 131.43 (September 2nd highs) while the upside prints resistances at 132.60 (September 28th lows), 133.00 (September 23rd lows), 133.30 (September 10th highs). According to the FXstreet.com trend index, the pair is strongly bearish on one-hour timeframe analysis and is offered below the EMA20.
Empirical facts
General expectations are an unchanged rate in interest rates in Japan after improving results seen after monetary policy to boost the economy and reemerge form crisis. Kathy Lien from FX Strategy says “The central bank is comfortable and confident about the strength of the recovery and their positive sentiment is validated by the recent Quarterly Tankan report which rose to its strongest level since 2008. Some economists fear that the BoJ is overly optimistic but data has been good. The latest services PMI business activity index rose to 53 in September from 51.2, a sign of continued recovery. Right now, the Japanese economy can do with its current level of stimulus but if Prime Minister Abe raises the consumption tax in April without cutting corporate taxes, the Bank of Japan may have to sweep in with another round of stimulus.” Earlier in Europe, the Markit series beat expectations indicating a possible take off, supported by stronger retail sales data and both Italy and France’s pulling-off of positive Markit Services PMIs.
EUR/JPY Technical levels
Technically speaking, the pair extends a gradual climb that originated last July 19th. Despite slow growth, the pair prints progressive higher lows and highs finally rising above the 134 zone earlier this week. Finding supports around the 131.43 zone (October 2nd lows), the pair bounces back up to consolidate around 132.43. The primary trend seems reversing for downfall but the secondary one remains facing up. On the downside, supports are aligned at 132.22 (September 16th highs), 131.83 (September 18th highs), 131.43 (September 2nd highs) while the upside prints resistances at 132.60 (September 28th lows), 133.00 (September 23rd lows), 133.30 (September 10th highs). According to the FXstreet.com trend index, the pair is strongly bearish on one-hour timeframe analysis and is offered below the EMA20.