The EUR to JPY (EURJPY) price is down for the second consecutive day as traders remain concerned about the upcoming election in the United States. It is trading at the important psychological level of 124.00.
The Japanese yen is often viewed as a safe-haven currency because of the large investments the country has international. Therefore, its value usually rises when there are risks in the market. Today, there are several risks, including the rising number of Covid-19 cases in several countries around the world.
There are also emerging geopolitical risks between the US and Iran, after the former accused the latter of election interference. Similarly, there are risks that the world will not see a Covid-19 vaccine any time soon. All these factors have made some investors rush to the safety of the yen.
Still, there is a possibility that the EURJPY price will remain in a consolidating pattern today as traders wait for important economic data. Tomorrow, we will receive inflation data from Japan and preliminary manufacturing PMI numbers from Japan and Eurozone.
Analysts polled by Reuters expect Japan’s inflation numbers to continue being under pressure as the country attempts to emerge from the pandemic. They also expect PMI data from Europe to decline from September but to remain above the expansionary zone of 50. Specifically, for the Eurozone, they expect the manufacturing PMI to drop from 53.7 to 53.1.
EUR to JPY technical outlook
The four-hour chart below shows that the EURJPY pair formed a double-top pattern at 125.00 on October 20. Since then, the pair has been falling, and yesterday, it reached a psychologically-important low of 124.00. As it dropped, it moved below the 25-day exponential moving averages.
Most importantly, the price is slightly above the pivot point of Woody pivots. It also seems to be forming a bearish pennant pattern. Therefore, while I expect the price will remain at the current range today, the bias remains to the downside, with the target being at 123.50.