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EUR/JPY: correcting through the 20 dma

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 27, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Guatemala) - EUR/JPY has managed to keep a better bid theme on a day where the FOMC was dovish, but committed to gradual rate rises. The euro was able to score territory on the 1.09 handle, but was only able to score 1.0916.

    USD/JPY, on the other hand, slid back from a handful of pips from the 119 handle, in fact, making a quick high and score on the 119 handle in the knee jerk price action of 119.06. Equities were ending the day lower in the US while rate hikes against a bearish global backdrop is not particularly conducive for a bullish case for corporations and an element of risk-off markets favoured the Yen, slowing the progress of the cross.

    Technically, EUR/JPY's 20 dma has been penetrated and is a bullish signal. This is located at 128.33 today while a high of 129.47 has already been marked, just shy of the 129.67 and November low. Through there lies the 130.38 50% retracement, where Chief analyst at Commerzbank, Karen Jones, suspects the price to struggle.

    "Longer term we have a negative bias. The market has a 2013-2016 support line at 126.56 that needs to give way on a closing basis. We also note the 126.08, 2015 low and consider this to be the break down point to the 121.87 50% retracement of the bull move from 2012."
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