For the third day in a row, the EUR/JPY is trying to stabilize above the resistance level at 132.00 to support the upward path of the pair. At the beginning of Tuesday’s trades, the pair retreated to 131.78 level before settling again around 132.15.
Eurozone inflation data and the German Business Trust index, ZEW, didn’t influence the Euro’s performance. The pair went through corrective path that lasted for 3 sessions after gains pushed it to 133.48 peak during last week’s transactions. The retreat was normal with the renewed geopolitical fears around the world and the increase attraction of the safe heavens, therefore, the JPY found support to achieve gains against other majors.
On the daily chart of the EUR/JPY, it is clear that the pair had a tough time dealing with resistance at 133.48 for two sessions before moving downwards. Despite that, the pair’s performance is still better than that of other Yen’s pairs. However, the gains are threatened by geopolitical fears with expectations of an imminent conflict between the US and North Korea, with the latter preparing for another stronger test, as expected by South Korea. The current gains of the Euro are supported by higher voices in the EU and the ECB calling for ending the massive stimulation plans adopted by the ECB to revive the European economy, which is still supporting the Euro’s gains against other majors.
We must take into consideration that any new political worries in the Eurozone, the return of worries in the financial markets among global geopolitical fears, is considered a strong opportunity for bullish move of the safe heavens led by the JPY,CHF and gold. Therefore, the EUR/JPY might move down to support at 132.00 or 131.00. Increasing the pressure on the EUR were the comments of the ECB governor on the strength of the Euro, affecting the ECB stimulation efforts.
Technically: As mentioned before, we are still confirming that as long as the pair is stable above 130.00, the general overview will be bullish, and the move above 132 is a bullish technical development for the pair, establishing above that area will support the move towards 134.20 and 133.75. on the bearish side, the nearest support levels are located at 131.80, 131.00 and 130.00. As mentioned in the previous analysis, buying at lower levels is still the best strategy in this market.
On the economic data front: Today’s economic agenda does not include any important European or Japanese data affecting this pair. Markets will be monitoring the political situation in Japan. The pair will also monitor any developments for the safe heave attractions, led by the Yen, in case of escalated geopolitical fears around the North Korean crises, or the political worries within the Trump administration.
