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Talking Points:
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EUR/JPY Technical Strategy: Flat
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Support: 141.83 140.36 139.17
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Resistance: 143.32 143.87 144.80
The Euro may be carving out a top against the Japanese Yen marked by the formation of a bearish Dark Cloud Cover candlestick pattern. Near-term support is at 141.83 the 23.6% Fibonacci retracement with a break below that on a daily closing basis exposing the 38.2% level at 140.36. Alternatively a reversal above the 161.8% Fib expansion at 143.32 clears the way for a test of the 176.4% threshold at 143.89.
While a short position seems attractive from a purely technical perspective we will tactically opt to stand aside. EURJPY is closely correlated with the S&P 500 stock index – a proxy for risk appetite – meaning the currency pair may run into sentiment-linked volatility driven by the closely-watched US Employment report due in the coming hours. That has potential to overwhelm technical considerations and we’re leery of committing to a directional bias until after event risk passes.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak Currency Strategist for DailyFX.com
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