EURJPY Reversal Risks
The decline in EURJPY from YTD highs can now be viewed as being framed by a falling wedge pattern, suggesting risks of a bullish reversal on the horizon. Price action is currently testing the top of the falling wedge pattern and with the retail community holding a more than 60% short position, there is room for appreciation here, as flagged by big bullish divergence in the MACD indicator The key level to watch is the 129.59 level. A close above here will put the 130.69 and 132.02 levels on the deck as targets. However, given the major support level at 127.18, there is still room for a further push lower before we see a rebound, so this is one to keep on watch for now.
Key Data to Watch
No key data for this pair this week so the main focus will be on broader risk flows, COVID updates and headlines stemming from Jackson hole. The big focus will be on Fed chair Powell and his signals regarding tapering. In the near term, EUR looks likely do better from a dovish outcome given that higher prices in risk assets should weaken support for JPY, creating room for upside.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.