Home Forex Analysis And Forecasts EURJPY At Major Inflection Point Ahead Of German IFO Business Index

EURJPY At Major Inflection Point Ahead Of German IFO Business Index

Key Takeaways

Euro resilient against the Japanese yen, but buyers face a major hurdle around the 140-30-40 area.

A break below the 139.40 level might call for a short-term reversal in the EURJPY pair.

EURJPY support seen at 139.40 and resistance ahead at 140.30.

The Euro managed to hold an important support area around the 139.20 level yesterday against the Japanese yen, but remains under pressure ahead of the German IFO business climate index release.

German IFO Business Climate index

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Later during the London session, the German business climateindex will be released by the CESifo Group. The forecast is of a decline from106.3 to 105.7. There is a high probability that the index might fall below105.00. In that situation, the Euro sellers could get a reason to take it lowerespecially against the Japanese yen.

Technical Analysis

There are two critical trend lines on the 4 hour timeframe of the EURJPY pair. One is acting as a support and another as resistance. Yesterday, the pair bounced right from the support trend line, which also coincides with the 50 simple moving average (SMA) – 4H. Earlier during the Asian session, the pair again tested the mentioned support area and bounced. However, the most important thing to note is that yesterday upside stalled around the 50% Fibonacci retracement level of the last drop from the 141.21 high to 139.26 low. So, there is a great chance that the pair might struggle to break the 104.25 resistance area and move lower. If it manages to break the trend line and support area, then a move towards the 100 SMA (4H) is possible in the near term.

EURJPY

Alternatively, if the par surges higher, then a break above the 140-40 level might call for a retest of the last high around the 141.21 level.

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