19 Jan 2015
EUR/JPY bearish gap closed and remains in demand
FXStreet (Guatemala) - EUR/JPY has made an impressive 170 pip advance since the opening gap to the downside 134.15 October 2014 low with a high so far of 136.84.
The gap was sealed at 135.90 before continuing on the bid to reach the aforementioned highs. The week is likely to bring volatility with major risk events. The biggest of which comes as the ECB meeting on the 22nd, with the FX space expecting the ECB to announce more front-loaded EGB purchases, and likely reacting to the initial shock in size and pace of EGB purchases. Moreover, markets will be listening out for expectations of increasing QE in the future, potentially looking to price these future eventualities into the Euro also.
EUR/JPY technically a sell on rallies
Technically, EUR/JPY has been sold off heavily from the cap of 150.00 and had been targeting the October low at 134.15. Karen Jones, chef analyst at Commerzbank said that any rallies are expected to terminate on moves into the
137.85/139.55 band. " We would use rallies into this band to sell into. We
view that the market has recently topped just ahead of 150.00, and short
to medium, the risk is now to the downside...Below 134.15 targets the
133.50/23.6% retracement of the move up from 2012. Longer term failure
here will introduce scope to 126.00/the 38.2% retracement."
The gap was sealed at 135.90 before continuing on the bid to reach the aforementioned highs. The week is likely to bring volatility with major risk events. The biggest of which comes as the ECB meeting on the 22nd, with the FX space expecting the ECB to announce more front-loaded EGB purchases, and likely reacting to the initial shock in size and pace of EGB purchases. Moreover, markets will be listening out for expectations of increasing QE in the future, potentially looking to price these future eventualities into the Euro also.
EUR/JPY technically a sell on rallies
Technically, EUR/JPY has been sold off heavily from the cap of 150.00 and had been targeting the October low at 134.15. Karen Jones, chef analyst at Commerzbank said that any rallies are expected to terminate on moves into the
137.85/139.55 band. " We would use rallies into this band to sell into. We
view that the market has recently topped just ahead of 150.00, and short
to medium, the risk is now to the downside...Below 134.15 targets the
133.50/23.6% retracement of the move up from 2012. Longer term failure
here will introduce scope to 126.00/the 38.2% retracement."