Chart of the Day Bearish EURJPY
EUR: It’s premature to be calling for EUR strength as slower EA data momentum and low inflation. Moreover, ECB QE will again generate a negative net supply dynamic in the EA bond market, forcing EA bond investors to buy foreign bonds. ECB QE is designed to keep the EUR lower for longer. However, there are upside risks for EUR if we see significant fiscal stimulus or a faster slowdown in the US than expected which prompt more rapid Fed easing, a USD negative.
JPY: Japan All Industry Activity Index: Japan All Industry Activity Index was unchanged in August (Jul: +0.2%) as the rise in tertiary industry activity was offset by the fall in manufacturing activity. YOY, the index slipped 0.5% (Jul: +1.3%) consistent with expectations of slower growth in Japan. Japan’s markets are closed on Tuesday for the Imperial Enthronement Day when Emperor Naruhito's enthronement ceremony will take place, almost six months after he ascended to the throne
From a technical and trading perspective the EURJPY has completed an ideal corrective pattern testing and rejecting the AB+CD target at 121.50 as this area contains the upside, there is the potential for prices to retreat to test symmetry swing support now sighted at 118.57 as highlighted in the chart above. A breach of 127.65 would encourage this view, on the day only a move through 121.45 would negate this pattern in the near term suggesting a retest of current cycle highs.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!