The Euro is in a downtrend versus the Japanese yen, and it looks like the EURJPY pair may trade further lower in the near term towards 112.00.
EURJPY Weekly Forecast – Why Euro May Trade Lower?
· Euro is currently correcting higher against the Japanese yen, but facing sellers near 113.50.
· There is a crucial bearish trend line on the H4 chart of EURJPY, protecting gains.
· The pair looks set for more declines may be towards the 112.00 low.
EURJPY Technical Analysis
The Euro after trading as low as 112.07 against the Japanese yen recovered. It traded above the 23.6% Fib retracement level of the last drop from the 114.39 high to 112.07 low. However, the upside was limited, as the pair found sellers near 113.50.
As mentioned, there is a crucial bearish trend line on the H4 chart of EURJPY, which is stopping the upside move.
As long as the price is below the highlighted trend line and resistance area, it may remain under a bearish pressure. The EURJPY pair may even trade towards 112.00 moving ahead.
Trade Idea – Selling around the highlighted trend line and resistance area may be considered with a stop above it.
This week started with a positive tone for the Euro, as there was a major economic report published today. The German IFO business sentiment index was released by the CESifo Group. It is a crucial and an early indicator to monitor the current conditions and business expectations in Germany. For September 2016, the market was expecting an increase from the last reading of 106.2 to 106.4.
However, the outcome exceeded the market expectation, as the German IFO business sentiment index rose to 109.5 in Sep 2016. The report published added that “In manufacturing the business climate index rose. This was primarily due to a far more positive outlook for the months ahead. A 10.8 point rise in the expectation indicator was last seen shortly after the financial and economic crisis. Assessments of the current business situation also improved”.
It looks like the business climate index rose in almost all department, which should have helped the EURJPY. However, the impact may be only in the short term, as the EURJPY pair remains in a downtrend.