EURJPY price forecast shows the pair is trading in the red after having erased the morning’s gains. The bearish pressure is high in the short term after the most recent rally. The current decline is to be expected and looks like fairly normal profit taking, so traders will have to wait and be patient before a fresh buying opportunity emerges.
The euro has decreased even though the German ifo Business Climate went up from 99.2 to 101.8, exceeding the 100.8 estimate.
Eurozone economy reaching escape velocity
Germany has been lifting its Covid restrictions, which in turn is pumping business optimism – and it’s not just in Germany. In France business optimism touched a 14 year high. Indicative of the rising confidence was the IHS Markit data of eurozone-wide business activity, which registered a 15-year high.
Ifo president Clemens Fuest, commenting on the encouraging German business confidence figures, said: “The German economy is shaking off the coronavirus crisis.”
Although the vaccination programme has been picking up across Europe, the Delta variant could pose a risk to reopening. Reports out today indicate that 25% of infections in Italy are now the work of the Delta variant.
The pair could resume its growth soon if the JP225 (Nikkei) climbs higher. We note the positive correlation between these two assets. When the Japanese stock index increases, the Yen will depreciate in value versus its rivals.
EURJPY price forecast: technical analysis
EURJPY price forecast sees the pair finding temporary resistance right above the descending pitchfork’s median line (ML). Now it has printed a potential continuation pattern. An upside breakout from this minor channel could bring traders a new long opportunity.
In the short term, we cannot exclude a temporary decline towards the 38.2% retracement level. Technically, jumping and stabilizing above the descending pitchfork’s median line (ML) could indicate an upside continuation.
EUR/JPY maintains a bullish outlook in the medium to the long term despite the strong corrective phase. You can see that the price wasn’t able to stabilize under the 61.8% retracement level signaling that the pair could resume its major uptrend.
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