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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 136.11-22, 135.43, 134.94
- Resistance:138.02, 138.52-80, 139.75
The Euro may be topping after bounding as expected against the Japanese Yen as prices complete a Bearish Engulfing candlestick pattern. Near-term support is in the 136.11-22 area, marked by the 23.6%Fibonacci expansion and the February 4 low. A break below that on a daily closing basis exposes a falling channel floor at 135.43. Alternatively, a reversal above the August 1 high at 138.00 clears the way for a test of the 138.52-80 region bracketed by the channel top and the 38.2% Fib retracement.
We are tactically opting not to pursue a long position, choosing not be long the Euro considering the ECB is shaping up to be the most dovish of the major central banks over the coming months. Rather, we will continue to monitor the upswing for opportunities to enter short.
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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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