The EURJPY pair made a U-turn on Monday. After falling from 126.50 to almost 125 on Friday on Shinzo Abe news that he steps down as Japan’s Prime Minister, the cross reversed on Monday, recovered all the losses, and put in a new high.
Two factors drove the price action on the EURJPY higher. On the one hand, the EURUSD major. The USD continued to be offered for the end of the month, and the EURUSD pushed towards the psychological 1.20 level.
On the other hand, over the weekend, the LDP party found a successor for Abe (i.e., Yoshihide Suga). A relief rally followed because Abe’s policies suddenly have continuity – hence, the JPY pairs uncertainty disappeared.
Euro Area HICP Inflation Expected to Disappoint
In less than an hour from now, the HICP inflation in the Eurozone is supposed to bring some volatility on the Euro pairs. Investors should be interested in the core data, above all. It is forecasted to come out much lower than the previous release, threatening to break to all-time lows into the 0.5%-0.6%. If that is the case, the Euro should not take it in a positive way because a higher Euro drags on inflation – something the ECB is not very happy about.
EURJPY Technical Analysis
The EURJPY is on a strong bullish trend for over two months now. Just like the EURUSD, it kept the series of higher lows and higher highs, typical in bullish trends. As long as the series holds, shorting it is dangerous. For the entire summer the Euro traded with a bullish tone – but now the summer trading conditions are over.
However, in light of a worse than expected HICP and a break of the rising trendline, shorts may consider a move to 120. For that, wait for the EURJPY to reach below 125.50 and place a stop-loss order at the highs. The move towards the 120 is bit enough to warrant an appealing risk-reward ratio.
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EURJPY Price Forecast
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