This week so far has been pretty slow, but the EURJPY pair is one that moved. It was rejected after retesting the neckline of a possible head and shoulders (or triple top, depending on how you look at it) and after if formed a rising wedge.
The move lower came in the context of a weak Euro across the board. The upcoming E.U. Summit at the end of the trading week is likely to bring important developments on the E.U.- U.K. Brexit negotiations front, and the EUR pairs, just like the GBP ones, are susceptible to strong moves.
E.U. – U.K. Negotiations Weigh on the Euro Pairs
The Euro already recovered a bit from the lost ground seen this week. The news that the United Kingdom’s delegation will not walk away from Brexit talks immediately offered support to the Euro pairs – except for the EURGBP.
But there is unlikely to see any progress at this summit. Therefore, any bounce in the Euro pairs on the hope of a deal will likely be met with more selling pressure moving forward.
Bank of Japan Prepares for a Digital Yen
Following in the ECB’s footsteps, the Bank of Japan announced recently that it starts trials on the digital Yen next year. After the ECB announced that it applied for the digital Euro trial, other central banks in the world united their efforts in an attempt to make the most of the digital space and the opportunities offered.
For the JPY and the Bank of Japan, the news created a bit of controversion between Japan’s ruling part and the central bank in terms of the timing of the introduction.
EURJPY Technical Analysis
The JPY remains bid, and so does the EUR. While the rejection from the horizontal resistance was notable, going short here does not offer a good incentive for bears.
Therefore, a better plan would be to wait for the EURJPY to make a new marginal high above 125. At this point, bears may want to go short with a stop at 127 and target the pivotal 120 level.
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EURJPY Trading Idea
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