- Summary:
- EURJPY still looks weak here as the only meaningful support level is seen into the 115 area. The first real test comes at the 120 level.
The recent reversal on the EURJPY pair came as a result of a triple top around the 127 area. Such a pattern shows hesitation, and the pair dropped more than four big figures in the meantime.
Moreover, traders looking at the bigger picture noticed that the triple top formed in the context of the price reaching dynamic resistance. A major bearish trendline offered dynamic resistance around 126-127, putting further pressure on the EURJPY pair.
ECB Lagarde Speaks This Week
Christine Lagarde, the ECB President, has two appearances this week. First, she will deliver the introductory statement at the ECON committee today in front of the European Parliament. Next, on Wednesday, she will speak at the ECB’s Watchers conference.
Both statements are important for the Euro as the core inflation threatens to break below the zero level. At the last press conference, Lagarde said that the ECB considers the drop in inflation as normal and views it as temporary. However, indications are that the HICP inflation next Friday will fall even more below the 0.4% level, and some voices even fear a drop into negative territory.
If that is the case, the ECB faces a tough time ahead, especially considering the U.S. elections. On the one hand, it is forced to ease some more to keep up with the Fed’s printing. On the other hand, anything it might do in the meantime could be overshadowed by the U.S. elections volatility.
Also, if we consider the time lag between any decision and its implementation, the chances are that inflation will drop below zero before the ECB can react. If that is the case, the EURJPY can easily reach 115 in the short to medium term.
EURJPY Technical Analysis
Even at this point, after the EURJPY pair dropped more than four big figures, there is still room to the downside. Bears will want to remain short targeting 115 and having a stop at the 126.50 level.
EURJPY Price Forecast
