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The Euro managed to gain traction against the Japanese yen recently and traded towards the 135.50-60 resistance area where the Euro sellers managed to hold the upside in the near term. There was no release lined up in the Asian session today, but there is an important event lined up in the Euro area. The German IFO business climate index will be released by the CESifo Group. The market is expecting the index to rise from the last reading of 106.7 to 107.7 in January 2015. Moreover, the German IFO Expectations and Current Assessment data will also be released along with the same report.

please see chart attached ad post image

There is a critical bearish trend line formed on the hourly chart of the EURJPY pair, which might halt the upside in the short term. However, if the Euro buyers step and manage to clear the highlighted trend line, then more upsides are likely moving ahead. So, it depends on the German IFO business climate index to some extent of the EURJPY pair can break higher or not. Currently, the pair is consolidating around the 100 and 200 hour moving averages, which are acting as a support for the pair. However, there is a chance of a spike lower moving ahead towards the 50% fib retracement level of the last leg from the 133.53 low to 135.88 high.

If the EURJPY pair breaks the highlighted trend line, then the next resistance can be seen around the 136.20 swing area.

Overall, one might consider buying with a break above the trend line in the EURJPY pair as long as it is trading above the 50% fib level.

Posted By Simon Ji of IKOFX Technical Team: Online Forex Broker

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