EUR/JPY flatlined after Doji candle

EUR/JPY is trading in a sideways manner above 132.00.
Doji candles signal indecision in the market.

Omkar Godbole FXStreet Contributor

EUR/JPY is trading in the sideways manner above 132.00 levels in Asia as investors assess the options left with Chancellor Merkel following the failure of coalition talks.

Kathy Lien from BK Asset Management writes, "The FDPs walked out, the Social Democrats refuse to form a coalition, leaving Germany with only 3 choices - New elections, Merkel forms a minority government, Merkel convinces FDP to return to the negotiation table."

Lien adds, "Germany's political troubles could send EUR/USD below 1.17. Yesterday's cautious comments from European Central Bank President Draghi confirm that the euro won't receive any help from the policy."

Along similar lines, the EUR/JPY could remain under pressure as well. That said, the sharp rebound from the 100-day MA seen yesterday has established the moving average as a strong support to watch out for. Also, a bullish move today would signal doji reversal.

EUR/JPY Technical Levels

A failure to hold above 132.00 would shift risk in favor of a drop to 131.40 (Nov. 8 low) and 131.25 (100-day MA). On the higher side, breach of resistance at 132.67 (50-day MA) could yield a rally to 133.16 (Friday's high) and 133.49 (Dec. 10 high).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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