The EUR/JPY has experienced a long term bullish trend and its current trajectory doesn’t look as it will face major stumbling blocks. Ok, true I always warn that trading forex is never a one-way avenue and that remains the case. However, the Japanese Yen has displayed a broad amount of erosion against the Euro since early May, and reversals while certainly possible do not look like they will be violent to the downside.
Since the last week of July when the EUR/JPY traded near the 123.000 support level, the forex pair has displayed the ability to demonstrate its long term trend upwards. Since May support levels within the EUR/JPY have incrementally increased. This has developed as Japan has made it clear it faces tough economic circumstances and the Bank of Japan has admitted economic growth will not only be challenging but unlikely.
The BoJ announced yesterday it does not believe it will face a deflationary environment, but said the impact of coronavirus will be strong and it is ready to act with more monetary stimulus. As a side note for readers who enjoy fundamental economic data, the Bank of Japan has been battling weak inflationary data for decades and its central bank policy remains a focal point for many critics.
In early trading this morning the EUR/JPY continues to test the 125.000 to 125.150 level as some selling has developed. Technically the 125.000 juncture could prove to be an important inflection point, particularly if the value of the EUR/JPY is able to sustain its gains above this mark. However, traders looking for the potential of slight reversals and selling opportunities may eye the 124.800 support level as a short term target to take advantage of slight reversals that could develop.
Speculators who wish to continue to pursue the long term bullish trend of the EUR/JPY should use the 125.000 to 125.100 levels as a juncture to monitor. If trading starts to produce higher values for the forex pair, targeting the 125.250 may prove an attractive opportunity, and if the bullish trend continues looking for higher resistance levels near the 125.500 cannot be faulted.
The EUR/JPY short term continues to look like a bullish buying opportunity for speculators who manage their risk wisely and can allow timeframes to work to their advantage.
EUR/JPY Short Term Outlook:
Current Resistance: 125.250
Current Support: 125.000
High Target: 125.550
Low Target: 124.800
