The EURJPY currency pair shed 0.90% week-to-date as the safe haven characteristics of the Yen have bolstered it at the expense of the Euro. After a period of heavy buying, the EURJPY struggled to maintain traction and failed to reach its year-to-date peak.  

The Yen was bolstered this week by weakening unemployment, but the upside could be limited by weakening retail sales and industrial production. The Debt Ceiling negotiations have left the market gunning for safety, while weakness in the second-largest economy in the world has further bolstered the appetite for safe-haven assets.  

Technical 

The EURJPY currency pair’s uptrend has seen price action flee from its 100-day moving average in an ascending channel pattern, while RSI conditions sustained in overbought levels for a while. Support and resistance were established at the 146.699 and 151.606 levels, respectively.  

A reversal is probable, given that price action now trades at the ascending channel support. If bullish traders outdo bears, the 151.606 level could come into play if bullish volumes substantiate. Alternatively, a high volume breakdown below the ascending channel support level could expose the market to further downside pressures. Bearish traders will likely aim for support at the 146.699 level if they commit to the downside.  

Summary 

The weakening economic conditions prevailing in Japan will likely challenge the Yen’s recent strength. With retail sales, industrial production and consumer confidence all falling short of consensus and the prior month, the EURJPY could be supported. In addition, risk sentiment will probably be defined by the labour market reports from the U.S. as traders discern whether they should stick to safe havens. The 146.699 and 151.606 levels will potentially be the key levels to watch.  

Sources: Reuters, TradingView