- Bullish Scenario: Buy above 171.20 with targets at 171.47 and 172.00 on extension. With a Stop Loss below 170.65 or at least 1% of the account capital. Apply Trailing Stop.
- Bearish Scenario: Sell below 170.60 (after forming a PAR*) with TP1: 170.00, 169.76, and 169.45 on extension, with a Stop Loss above 171.25 or at least 1% of the account capital.
Fundamental Analysis
- The ECB keeps interest rates unchanged after reducing them last month.
- Lagarde will address weak growth and high inflation in the press conference.
- Japan intervened to support the yen as it fell to a 38-year low.
- The weak yen increases import costs and affects private consumption in Japan.
- Rate cuts are anticipated in both Europe and the US in the last quarter of the year.
The EURJPY pair is in the spotlight due to the ECB's decision to keep rates unchanged and Christine Lagarde's press conference, where she is expected to address weak growth and persistent inflation in the eurozone. These events could influence expectations of future rate movements and, consequently, the strength of the euro.
Simultaneously, Japan has intervened to curb the yen's decline, which has reached a 38-year low, reflecting concerns about the impact on import costs and private consumption. This move suggests Japan might continue intervening if the yen keeps weakening, especially if inflation and political pressure increase.
The expectation of rate cuts in Europe and the US, along with Japan's interventions, could generate volatility in the EUR/JPY pair. If Lagarde suggests that more data is needed for future decisions, and Japan continues to defend its currency, significant fluctuations in the euro-yen relationship in the short term might occur.
Technical Analysis, H2. Intraday and Swing Outlook
EURJPY
- Supply Zones (Sells): 171.16; 172.70
- Demand Zones (Buys): 170.25; 169.76; 169.45
The intraday technical structure shows a decisive break of the 173.51 support, confirmed with new lows, implying a reversal and change to a bearish trend intraday. In this context, the current consolidation after reaching 170.00 suggests the need for a correction, especially if the price exceeds the high-volume area around 171.15 and the bullish range at 171.24, forming the most recent supply zone before the day's opening drop.
The goal for intraday and swing buys is the broken support at 171.45 and the weekly opening at 172.05, noting that the last significant resistance of the new intraday bearish trend is 172.92. This implies that as long as this level is not broken, the trend remains intact. On the other hand, if prices stay below the supply zone around 171.15, the previous bearish continuation is expected with a formation of an exhaustion/reversal pattern with targets at the discovered POCs* forming demand zones at 169.76 and 169.45.
*Discovered POC: POC = Point of Control: It is the level or zone where the highest volume concentration occurred. If a bearish movement followed it previously, it is considered a sell zone and forms a resistance zone. Conversely, if a bullish impulse occurred previously, it is considered a buy zone, usually located at lows, thus forming support zones.
