- EUR/JPY sliding below a key support level, on the verge of a top confirmation.
- The 200-DMA is the next key support level to break to confirm the top.
EUR/JPY is currently trading a touch lower on yen strength on Thursday, with the price below the 21 4-hour moving average following another slide, en-route to confirming a top. EUR/JPY has travelled from a high of 1322.05 today to a low of 121.42.
The bulls have been washed out and along squeeze as FX markets de-risk into the last trading days for the year. The euphoria is dissipating (although looking to higher stocks you wouldn't think it) on conflicting sentiment and an air of caution is creeping its way back in. While a so-called 'phase-one' trade deal between the US and China seems to have gathered traction following last week's announcements and confirmation from both sides that a deal has been agreed, there are still plenty of road bumps along the way.
European politics up in the air
Similarly, European politics is just as up in the air. While a Brexit breakthrough has been accomplished with the UK general election voting in the Tories, it is far from game over with respect to risks. A hard Brexit is still very much on the table, just that it is a little further along the horizon at his juncture considering how little time the UK Prime Minister is allowing for a full soft Brexit deal to be negotiated.
EUR/JPY levels
Bulls were capped below a 61.8% Fibonacci retracement at last week’s high at 122.63/65. EUR/JPY’s slide below the 21 4-hour ma brings the 200-DMA into focus now at 121.26 around October highs. "Support below the 200-day moving average at 121.28 comes in at the121.01 early December high," analysts at Commerzbank argued. "Into year-end the June and July highs at 123.18/34 may still be reached, though. Further up sit the March low and the May 21 high at 123.65/75," the analysts added.
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