The EURJPY is up 0.25% on the back of Yen weakness and growth in the Euro area industrial production. This has put the EUR/JPY pair on course to ending the week higher.
The EU’s statistical office said that the industrial production within the Eurozone area grew by 0.7% in June, scaling beyond the market consensus of 0.2%.
The latest data translate to an annualized growth of 2.4%, beating the consensus of 0.6% and also rising above the previous number (1.6%). The numbers also represent the third month of growth after the data piece had registered a growth of 2.1% in May (an upward revision). The capital goods production sector saw most of the increase, with a 2.6% rise. However, durable goods production dropped by 1.1%.
The data provided temporary support for the Euro and complemented the Yen’s weakness on the day after a solid end to the week by the Nikkei 225 index. However, despite the rise in the EUR/JPY, the pair’s advance could be limited after Danske Bank further downgraded the Euro’s performance against the USD, predicting a drop below parity to 0.95. This outlook also follows Rabobank’s earlier outlook, indicating the potential for significant Euro weakening over a 1-3 month outlook.
EUR/JPY Forecast
The 1 August candle low attained the rising wedge’s completion point at 135.056. From there, the recovery bounce met resistance at 138.125 before a pullback toward the 136.581 support.
The attempts at a bounce from this level must breach 138.125 before the bulls can progress toward 139.461 (13 June low and 27 July high). Only if the price action breaks this resistance, where the upper edge of the descending channel is found, will we see a further advance toward 142.058 (12 July high). 144.114 (8/22 June highs) and the 27 December 2013 high at 145.683 are the additional upside targets found above this new price barrier.
On the flip side, a decline below the 136.581 support brings in 135.056 into the mix as the immediate downside target. 132.672 (12 May 2022 low) becomes available for the bears if they breach the 135.056 pivot.
EUR/JPY: Daily Chart
