EURJPY: Supporting the Cause

The North American trading day ended on a sour note as US equities attempted to climb in to the green in the second half of trade, but fell faster toward the end of the day than at any other time.  The approximate 1% drop in both the Dow and S&P 500 also provided a bad taste for the end of the first quarter which seemed to be all over the place; up one day, down the next, and so forth.  The volatility in stocks isn’t likely to end with Q1 though as the persistence of the Federal Reserve’s “will they, or won’t they” narrative is likely to continue until June at least.  Each new US data release helps bolster the case of those who either argue for or against an interest rate increase, so the waters are likely to remain choppy for the time being.

One currency pair that tends to follow stock market moves is the EUR/JPY.  Just like equities today, the EUR/JPY had a hard time getting out of its own way as it fell to levels of support that could potentially be very helpful in mounting any kind of advance.  News out of Greece today wasn’t great as the Troika evidently dismissed Greece’s ideas for reform as just that -- ideas.  They stated that it wasn’t a concrete plan for reform, but we haven’t gotten to the point of a Grexit freak-out quite yet.  The EUR weakened on the day, but it wasn’t particularly noteworthy, and may have some fight in it as we coast to the end of week.

Considering that this week ends with a holiday for a majority of the world, it wouldn’t be out of the question to see the EUR give more of a sideways feel instead of a general sell-off or strong rally.  For that reason, finding levels of recent support or resistance may be most helpful as they could signal starting and ending points for rallies and drops.  Conveniently, the EUR/JPY just found a level of support around a round number (129.00) that has also previously provided both support and resistance, and happens to coincide with a Fibonacci based Bullish Gartley pattern that is completing in the same region.  While the overall trend is down in this pair, the clustering of support may give it enough of a boost to advance back toward the longer term falling trend line which may also coincide with previous price resistance.

Figure 1:


Source: www.forex.com