Marshall Gittler
Trading Analysis
EUR/JPY
The dollar traded higher against almost all of its G10 peers during the European morning Friday. It was higher against NZD, AUD, CAD, JPY, NOK and GBP, in that order, while it was lower vs CHF, SEK and EUR.
Eurozone's preliminary CPI rose 0.2% yoy in July, unchanged in pace from the previous month and in line with market expectations. EUR strengthened however as the core CPI rose 1.0% yoy from +0.8% yoy, above estimates of an unchanged reading. EUR/USD advanced but stayed limited below our 1.0985 resistance level. Given the positive sentiment towards the common currency we could see the rate trading higher in the short run. However, I would prefer to see a clear move above the psychological 1.1000 to trust further advances.
EUR/JPY traded higher during the European morning Friday, after it hit support at the 135.50 (S1) barrier, slightly above the medium-term uptrend line taken from the low of the 14th of April. Taking a look at our short-term momentum indicators, I would expect the positive move to continue. The RSI turned up and just poked its nose above its 50 line, while the MACD, although negative, shows signs of bottoming and that it could turn positive again. A clear move above 136.35 (R1) is likely to confirm the case of further upside and perhaps pave the way for the 137.00 (R2) zone. On the daily chart, the pair is still trading above the aforementioned medium-term uptrend line, and above the 133.30 support area, which stands marginally below the 50% retracement level of the 14th of April – 4th of June advance. As a result, I would see a cautiously positive longer-term picture. I would like to see a daily close below that area before I assume that the medium-term picture has turned negative.
Support: 135.50 (S1), 135.00 (S2), 134.40 (S3)
Resistance: 136.35 (R1), 137.00 (R2), 138.00 (R3)
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