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EUR/JPY now depends on the greenback

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 10, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    EUR/JPY is currently consolidating the upside after the ECB and presser that had shorts squeezed out on a rally in the euro, unexpectedly so, as Draghi delivered a surprise comment.

    The rebound of the euro exchange rate after comments by Draghi that the ECB could not cut rates as low as it wanted and this indicates that betting on a weaker euro as the outcome of today's meeting is risky, as noted by Carsten Brzeski, analyst at ING Bank.

    ECB, all in all...not good enough - ING

    In respect to the Yen, it is strong else where and might indicate that a reversal would target below the 125 handle on a correction in EUR/USD. We now turn to the greenback and fundamentals on that basis. Richard Franulovich, analyst at Westpac noted that next week's FOMC could easily stymie EUR.

    Can the FOMC stymie the euro's upside?

    "A hawkish shift in the Fed's tone – already evident in recent speeches by San Fran's Williams and Vic Chair Fischer – should see the USD benefit from likely further positive data surprises."

    EUR/JPY levels

    EUR/JPY has broken up through the 20 day moving average at 124.91 and has confirmed the minor bottom that was being formed on the 29th Feb rally from 122.05 lows of the 132 downtrend. "It may well have been the end of the current down move and we look for further gains towards key resistance which is the 130.82 2015-16 downtrend line. Only above here would negate current downside pressure," explained Karen Jones, chief analyst at Commerzbank, adding, "Only below the 122.08 current March low would see further downside targets engaged to the 120.00 region, then 115.30."
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