EURJPY
The EURJPY pair failed at resistance with a sell-off yesterday and weaker data from the Eurozone couldn’t reverse the losses. German inflation figures came in as expected with a -0.2% print but the numbers confirm the deflationary trend in the bloc. The ECB has recently referenced the deflationary pressures of a weaker Euro and hinted at intervention so weakness in the core German economy removes upside pressure.
ZEW economic sentiment figures from both the Eurozone, and Germany, also added to the bearish tone of the past two days. Both numbers were expected to come in above 70, but were in the 50s.
Further pressure on the Euro came from the ECB Vice President Luis de Guindos, who noted sagging strength in the economy. de Guinos said: said “High-frequency indicators point to (the economy) losing a certain momentum. “Our policy reaction will be consistent with the evolution of the situation.”
The Vice President also noted that they will release new projections in December and that will guide any further stimulus activity from the central bank.
Japan’s new Prime Minister, Yoshihide Suga, also confirmed that the Japanese government will have new measures ready by as early as November. This should leave the threat of ECB intervention as the threat to Euro gains, but we also have an EU summit this Thursday with crunch Brexit talks, so it is another reason to be wary of EURJPY longs.
EURJPY failed to hold the 50-day moving average yesterday and this sets up a potential bear move towards the 122.50 lows from September 28th. If the pair can find support then a move above the average would be likely. Stop losses for a short can be placed around the 125.30 level. A lower close today would continue the downtrend. The Investing Cube team is currently available to assist all levels of traders with the Forex Trading Course or through one-to-one coaching.
