EURJPY Potential Reversal Zone – Probable Price Path
EUR: ECB officials are concerned about the euro’s recent gains, and the euro may continue to consolidate in the short term. The July production price index in the Eurozone narrowed its year-on-year decline to 3.3%, in line with market expectations. German Central Bank President Weidmann said that after the epidemic stabilizes and prices stabilize, the European Central Bank must tighten some monetary policy measures again, including an emergency debt purchase plan of 1.35 trillion euros
JPY: The risk aversion in the market is expected to influence the performance of the yen, and investors are watching the development of the Japanese political situation. Chief Cabinet Secretary Yoshihide Suga officially announced his participation as the president of the Democratic Party. The outside world said that he is expected to get enough votes to be elected, and he will be approved by the National Assembly as prime minister in mid-September. Bank of Japan member Takeshi Kataoka said that the central bank should show determination to prevent prices from falling and still need to lower interest rates to reduce deflationary pressures
From a technical and trading perspective,the EURJPY is sitting on pivotal trendline support at 125.20 a closing breach of this level will likely see bearish exposure rewarded, initially targeting a test of the prior cycle highs at 124.38, as any bounces from this level are contained by the prior trendline support acting as resistance then bears will see scope for a test of symmetry swing support sighted at 122.05. On the day a close back above 126 would suggest the corrective thesis is premature, opening a test of 127.50 before bears will likely attempt counter trend positions once more.
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