The Euro struggled during this past week against most other major currencies, including the Japanese yen. However, the losses were not that much as compared to the US dollar, but the EURJPY pair broke an important support area which might encourage the Euro sellers in the short term. There was an economic release during the London session i.e. the German factory orders data was released. The market was already expecting a decline this time, but the outcome was even worse as the German factory orders declined by 5.7%. This is a lot more than the market was expecting. However, the Euro was not affected that much and was seen trading a touch higher after the release.
There was a contracting triangle formed on the hourly chart of the EURJPY pair, which was broken recently. However, the follow through after the break was not convincing. There is a chance that the pair might retrace back towards the broken triangle support area, which could now act as a resistance. The 38.2% fib retracement level of the last decline from the 137.87 high to 137.03 low is also around the broken support area. So, the Euro buyers might struggle around the 137.25-35 resistance area. Only a break and close above the mentioned area would call for more gains in the short term.
On the downside, initial support is seen around the last low of 137.03. A break below could take the pair towards the 136.50 level.
Overall, one might consider selling around the mentioned resistance area as long as the pair is below the broken triangle area.
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Posted By Simon Ji of IKOFX
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