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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 138.00, 137.28, 136.10
- Resistance: 139.18, 139.74, 140.69
The Euro may have formed an interim top against the Japanese Yen after prices put in a bearish Dark Cloud Cover candlestick pattern. Near-term support is at 138.00, the intersection of the 14.6% Fibonacci expansionand a recently broken channel top. A break below that on a daily closing basis exposes the 23.6% level at 137.28. Alternatively, a reversal above the September 12 high at 139.18 clears the way for a test of the 50% Fib retracement at 139.74.
Positioning appears conflicted. Last week’s channel break argues in favor of an upside scenario, painting any forthcoming weakness as a buying opportunity. With that said, buying the Euro seeks ill-advised considering the ECB now seems most dovish of the major central banks. On balance, we will remain on the sidelines until a larger bearish reversal is confirmed and look to enter short at that point.
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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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