Economy Forex News

EUR/JPY: The lower trend line of the bullish pennant at 131.00 limited the move lower

  • EUR/JPY is pressured to the downside as central banks are delaying the EUR/JPY’s move to the downside.
  • Market sentiment is bullish except in the FX market as the JPY and USD appreciate.
  • EUR/JPY: The lower trend line of a bull flag triggered a 30 pip jump in the pair.

EUR/JPY plunges on the day, down 0.83%, trading at 131.28 in the US session at the time of writing.



Market sentiment is upbeat

Market sentiment is positive, owing to central banks in developed countries delaying higher interest rates. The Federal Reserve announced the long-awaited bond tapering on Wednesday, but it was perceived as moderate. Furthermore, the Bank of England (BoE) reversed its intention to raise interest rates as expected by the market, instead keeping them unchanged, which caught some investors off guard.

Nonetheless, global equities rallied, led by U.S. stocks at record highs. In the currency market, risk-averse currencies fall, benefiting safe-haven peers such as the US dollar and the Japanese yen.

EUR/JPY briefly broke through the lower trend line of a bull flag

EUR/JPY briefly broke a bull flag’s lower trend line, but found buyers around 131.00, bouncing back to current levels. The 50 and 100 simple moving averages (SMAs) are both higher than the spot price, putting downward pressure on the currency. The 200 SMA around 130.80, on the other hand, would be a difficult barrier for EUR/JPY sellers to overcome.

To keep the EUR/JPY bulls in charge, the 50 SMA at 132.10 must be reclaimed. In that case, the 100 SMA at 132.25 would be the next point of resistance, followed by the top of a bullish pennant around 132.60. If the latter is breached, the October 20 high of 133.47 will be revealed.

Failure at 132.10, on the other hand, would expose a downside break of the bullish flag around the 131.00 region. In that case, the 200 SMA would be the first support, followed by the October 6 high at 129.49, which was resistance but is now support.


Michelle D. Madsen

Michelle D. Madsen graduated from the University of Westminster and has been deeply involved in the world of finance ever since. She has worked as a Broadcast Journalist hosting various news shows and informative webcasts about the financial markets. Since 2004 she has also been writing for Metanews daily, her attention to detail, and her in-depth knowledge of the financial markets have led her to cover Foreign Exchange and commodities. The world of finance has changed in the last few years with the introduction and rising popularity of cryptocurrencies. She has in no means been left behind, adding this to her bank of intellect and is now also an expert in cryptocurrencies. For the last ten years, Ms. Madsen has been engaged in the financial market. She has notedly written a great number of incredibly informative reviews for the crypto exchange and forex brokers. Her wealth of knowledge has enabled her to become a leading expert in the field. She continues to inform the public writing up-to-date, thorough reviews for the readers of Metanews as she has for the last decade.
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