EUR/JPY price analysis: Close to the 161.8 per cent barrier
Looking at a basket of Euro based currencies, the base currency (EUR) looks set for a correction lower. We look for gains to be limited
Market highlights from the last week
Wednesday 13 May: Bank of Japan Governor Haruhiko Kuroda stated that the central bank can expand asset purchases further and cut interest rates if needed.
Thursday 14 May: China’s Global Times reported a personal comment from editor Hu Xijin that US-China conflicts are rising, and the risk of a military clash is increasing.
Friday 15 May: Japanese GDP declined 0.9 per cent for the first quarter of 2020 compared with consensus forecasts of 1.1 per cent.
Monday 19 May: In comments at the WHO assembly, Chinese President Xi Jinping stated that global supply chains must be kept open.
Tuesday 20 May: The headline German ZEW economic sentiment index strengthened to 51.0 for May from 28.2 in April, which was well above consensus forecasts of 30.0 and the strongest reading since April 2015.
EUR/JPY Price Analysis
Let us have a look at the technical viewpoint.
Monthly: For the last 3 months dips have found buying interest. Levels under the 78.6 per cent Fibonacci of 115.26 were bought into.
Weekly: Holding within a large channel formation. Trend line resistance is located at 120.22.
Daily: Previous resistance level of 117.77 has been clearly broken. The 161.8 per cent extension from 114.42-116.84 is seen at 118.34. We have a pivotal level at 118.80.
Outlook: Looking at a basket of Euro based currencies, the base currency (EUR) looks set for a correction lower. With a 161.8 per cent upside barrier, we look for gains to be limited.
Possible trade setup
Action: Selling at 118.30
Potential return on risk to first target: R3.8 (reward 230 / risk 60)
Risk warning – your capital is at risk – losses can exceed deposits
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