The Euro performed very badly in the last couple of weeks not only against the US dollar, but also against the Japanese yen. The EURJPY pair is following a nice bearish trend and it looks like it might continue trading lower in the near term. The Euro zone current account data will be released today during the London session. Let us see how the pair trades moving ahead as there is a key support around the current levels. If the Euro sellers gain control then a downside acceleration is possible in the short term.
There is a nice ascending channel formed on the hourly chart of the EURJPY pair, which is currently acting as a support for the pair. The pair tested the mentioned channel support area on a number of occasions, but sellers failed to break it. However, there is a chance that the EURJPY pair might break the channel and trade lower in the near term. The hourly RSI is well below the 50 level, which is signalling weakness in the pair. It is important to note that the pair failed around the 38.2% fib retracement level of the last leg from the 1.38.72 high to 134.70 low recently, which is also a bearish signal. Let us see what happens in the near term if the sellers gain control.
If the Euro buyers fail to defend the mentioned channel support, then a break below it might take the EURJPY pair towards the 134.20 support area.
Overall, one might consider selling with a break below the channel support in the EURJPY pair as long as it is trading below the 136.00 level.
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Posted By Simon Ji of IKOFX
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