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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 138.79, 138.02, 136.38
- Resistance: 139.74, 140.69, 141.87
The Euro continued to push higher against the Japanese Yen as expected after overturning a six-month down trend. A daily close above the 50% Fibonacci retracementat 139.74exposes the 61.8% level at 140.69. Alternatively, a turn below the 38.2% Fib at 138.79 opens the door for a challenge of the intersection of the former range and channel top resistance at 138.02.
While entering long seems compelling from a purely technical perspective, we will pass on the trade. On one hand, buying the Euro is unattractive considering the ECB looks to be the most dovish of the major central banks. On the other, the threat of on-coming risk aversion that spurs an unwinding of Yen carry trades warns against selling the Japanese unit.
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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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