31 Oct 2013
EUR/JPY tumbles on Nikkei decline, BoJ decision
FXstreet.com (Athens) – The EUR/JPY is falling slightly after BoJ by unanimous vote kept monetary policy unchanged as expected.
EUR/JPY capped by 135.00; cross falls on Nikkei decline, after BoJ decision
The EUR/JPY was trading well above 135.00 area and despite the fact most market participants had priced in that BoJ would stick to its previous policy, there were also many other that might probably were waiting for something more, i.e. to tweak economic assessment up or to engage with more QE increases. The cross lost some slight ground after the BoJ decision release, now hovering well below 135.00 area. Apart from BoJ decision which was in broader line with expectations, traders should read between the lines to realize that the sharp pullback of the EUR/JPY from 135.30 area to 134.85 might be also to a major extent attributed to the heaviness in EUR/USD. Last but not least, Nikkei declined by 20% and as it is widely known there is an immensely inverse relationship between the Nikkei and the Japanese currency.
Technical Perspectives on the EUR/JPY
Market participants could see that a trend reversal lower is in the works. A potential break of the minor rising trend line support as of 134.80 would maybe lead the cross to the 133.10 area (the 23.6 Fibonacci Level). Also, on the upper level, traders should bear in mind that the most near term resistance lies in the 135.50-135.82 area, which is the October 22 high. Karen Jones Head Technical Analyst of Commerzbank, mentions that the EUR/JPY remains bid near term - last week the market rallied to and held the initial test of the very long term retracement at 135.33 (23.6% retracement of the move down from the 1979 high). We note in addition the TD perfected set up on the daily chart, yet the market is simply not backing away from this resistance. We are unable to rule out some slippage to key support, which remains the 55 day ma and 4 month uptrend at 132.45/132.08. Beyond this the market remains capable of gains to 136.71, the target from the triangle, which broke up from the end of last year, which we suspect will hold the topside. Beyond here, the June 2009 high at 139.26.”
EUR/JPY capped by 135.00; cross falls on Nikkei decline, after BoJ decision
The EUR/JPY was trading well above 135.00 area and despite the fact most market participants had priced in that BoJ would stick to its previous policy, there were also many other that might probably were waiting for something more, i.e. to tweak economic assessment up or to engage with more QE increases. The cross lost some slight ground after the BoJ decision release, now hovering well below 135.00 area. Apart from BoJ decision which was in broader line with expectations, traders should read between the lines to realize that the sharp pullback of the EUR/JPY from 135.30 area to 134.85 might be also to a major extent attributed to the heaviness in EUR/USD. Last but not least, Nikkei declined by 20% and as it is widely known there is an immensely inverse relationship between the Nikkei and the Japanese currency.
Technical Perspectives on the EUR/JPY
Market participants could see that a trend reversal lower is in the works. A potential break of the minor rising trend line support as of 134.80 would maybe lead the cross to the 133.10 area (the 23.6 Fibonacci Level). Also, on the upper level, traders should bear in mind that the most near term resistance lies in the 135.50-135.82 area, which is the October 22 high. Karen Jones Head Technical Analyst of Commerzbank, mentions that the EUR/JPY remains bid near term - last week the market rallied to and held the initial test of the very long term retracement at 135.33 (23.6% retracement of the move down from the 1979 high). We note in addition the TD perfected set up on the daily chart, yet the market is simply not backing away from this resistance. We are unable to rule out some slippage to key support, which remains the 55 day ma and 4 month uptrend at 132.45/132.08. Beyond this the market remains capable of gains to 136.71, the target from the triangle, which broke up from the end of last year, which we suspect will hold the topside. Beyond here, the June 2009 high at 139.26.”