The EURJPY decline continues after a short spike higher. The recent bounce corresponded to a recovery in the EURUSD pair after the FOMC meeting this week. However, from a technical perspective, the spike reached previous support turned resistance.
The JPY is one of the fewest currencies that trend these days. After the USD rallied until the summer, the rally lost steam during the summer months.
It took Abe’s announcement to resign for the JPY to move. The USDJPY pair began a slow-moving bearish trend, trapping EURJPY bulls too.
Extremely High Public Support for the New Japanese Prime Minister
Shinzo Abe’s resignation took markets by surprise. The longest-serving prime minister of modern Japan announced that he is stepping down due to health issues.
The ruling party moved quickly – in a matter of days, it designated Suga as a suitable candidate. Fast-forward one month, and there is a new Prime Minister in Japan.
Abe’s legacy will always be remembered. The set of measures designed to weaken the JPY, Abenomics, created much volatility in the financial markets. More precisely, Abenomics deals with monetary easing, structural reforms, and fiscal support – all deployed at the same time. The idea is to create inflation and stimulate economic growth.
Japan did grow under Abe. But now that Abe is gone from the political arena, the JPY started to strengthen. While Suga’s policy is viewed as one that ensures continuation, the market tests a different scenario for now – a stronger JPY.
What’s interesting is that recent polls reveal that Suga’s cabinet is the third most popular at its debut in the history of Japan. Could it be that people do not believe in Abenomics anymore?
EURJPY Technical Analysis
The EURJPY formed a triple top around 126, and it broke lower. Now that the price retested the neckline, the measured move points close to 120 – much lower than current levels.
To trade it, bears need a stop-loss at the last lower high during the triple top’s formation and an entry at market, targeting 120.
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EURJPY Price Forecast
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