Ross Woodfield
Blackwell Global Investments Limited
The EURJPY pair is forming an upward sloping wedge as it heads towards the upper level of a bearish trend. A breakout could be to the downside, taking the Euro passed the recent nine month low.
The Euro Yen pair is an interesting one to watch as they battle for prize of ultimate central bank. At this stage the Bank of Japan (BoJ) seems to be winning as Japan comes out of decades of deflation. The European Central Bank (ECB) hasn’t taken such an aggressive approach, opting more for talking the currency down and acting only when absolutely necessary. The result is that the yen is looking more robust as Japan recovers and the Euro continues to weaken as more stimulus is likely.
The leaves the EURJPY pair in a downward channel and the price looks set to touch the upper channel and bounce off it lower. This will coincide nicely with the point of the upward sloping wedge that has been forming on the H1 chart below.
There is little news out for either the Yen or the Euro over the next 24 hours so we should see technicals take over and the price to continue to consolidate. It would pay to catch the momentum down only once a breakout has been confirmed. It would also pay to keep an eye on key technical levels as they may stall to downward momentum. These can be found at 136.84, 136.62 and 136.35.
The EURJPY pair is looking to continue consolidating in a upward sloping wedge before it comes in contact with the upper level of a bearish channel. This could provide a decent breakout to the downside.
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