Euro, EUR/USD, US Dollar, EUR/JPY, Japanese Yen – Talking points
- EUR/USD has broken down and is eyeing off a 5-year low
- Yen depreciation has seen EUR/JPY boosted but it now faces hurdles
- Broader weakness in the Euro might provide opportunities
EUR/USD TECHNICAL ANALYSIS
After failing to break below the January 2017 low of 1.0340, EUR/USD has staged a rally that has broken back above one descending trend line but failed to overcome a second one.
The recent peaks are just above that descending trend line and have set up a potential resistance zone at 1.0757 – 1.0787. Below that cluster, the 10-, 21-, 34 and 55-day simple moving average (SMA) could also offer resistance.
Resistance may also be the historic break point of 1.0638, which was the March 2020 low.
The gradients of the 10-, 34- and 55-day SMAs are negative which may signal that bearish momentum is evolving. The 21-day SMA has flattened out and more days with the price below it will see it roll over to further support the bearish case.
Support could be at the recent low of 1.0349 or the January 2017 low of 1.0340.
EUR/JPY TECHNICAL ANALYSIS
EUR/JPY has made a 7-year high last week with Yen weakness remerging. After breaking below an ascending trend line last month, it has established a new ascending trend line.
Momentum on the rally emerged after the price broke out of the topside of a Pennant formation.
This has seen bullish momentum unfold. A bullish triple moving average (TMA) formation requires the price to be above the short term simple moving average (SMA), the latter to be above the medium term SMA and the medium term SMA to be above the long term SMA. All SMAs also need to have a positive gradient.
Looking at any combination of the 10-, 21-, 55- and 100-day SMAs and the criteria for a bullish TMA have been met for EUR/JPY.
Resistance might be offered at the recent peak of 144.25. On the downside, support may lie at the break points of 140.00, 139.00 and 138.32. Nearby, Friday’s low of 140.80 could provide support.
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter