EURJPY has moved lower this week as we head into today’s crunch EU summit in Brussels. After closing the week a few pips shy of 125.00, the pair is now 160 pips lower with a bearish tone.
The two-day EU summit will include Brexit negotiations and tomorrow is the date that Boris Johnson had threatened to walk away from talks if no agreement was in place. The European Union’s Ursula von der Leyen warned that there was “still a lot of work ahead of us”. She said that, “Conditions must be right, on fisheries, level-playing field and governance”.
The pound was able to rally against the euro yesterday as traders still have hope that a deal can be reached but the Brexit talks have been tense since day one and there’s still a chance of a No Deal shock on Friday. Media outlets had suggested that a “deal in principle” could be reached ahead of a legal text, which would be drafted later. The Yen will likely see safe haven gains continue into the summit until any deal is announced.
Tomorrow will also see the release of core Eurozone inflation with a reading of 0.2% expected versus last month’s 0.4%. The German number came in as expected and that may be a good sign, but a lower number would weigh on the euro as the ECB have recently considered intervention to remove the deflationary effects of a higher euro.
EURJPY Technical Outlook
EURJPY continued its move lower yesterday and is looking at the 122.50 level for support. If the pair breaks this level then it could lead to a move as low as 119.50. Resistance is at the moving average near 125.00 so a short trade would need a 160 pip stop loss. The Investing Cube team is currently available to assist all levels of traders with the Forex Trading Course or through one-to-one coaching.