The EURJPY currency pair gained 2.40% in the prior week as the risk appetite drove demand for the Euro. The trend recommenced as the week opened, with the Yen giving ground to the Euro.
The EURJPY is moving higher partly due to two economic events in Japan and Europe. Firstly, The Japan Tankan Large Manufacturers Index, which measures conditions in Japan’s business environment, came in lower than expected, indicating lower confidence in the country’s macroeconomic environment. Secondly, the Euro Area S&P Global Manufacturing PMI was higher than expected, suggesting robustness within the European economy.
The EURJPY entered an uptrend following the price breakout above the 100-day moving average and resistance level. The breakout above resistance at the 143.172 level left the level acting as support, while resistance was established at the 145.399 level.
Bullish traders will likely be enticed to continue the uptrend, with the 145.399 level earmarked as a probable level of interest. If price action breaks out above the 145.399 level on high volumes, the uptrend could be firmly established, with bulls likely aiming for the 146.736 level.
Alternatively, if bearish traders look to selling high, the pair could be lowered with bears looking to the 143.172 level with interest. If price action approaches the upside on declining volumes, it could signal the wearing off of bullish momentum and validate a probable reversal.
Traders will track the U.S. Non-Farm Payrolls (NFPs) for March this week as the central economic event presents the Labour Markets condition and hints of inflation’s progress. If the NFPs come in higher-than-expected, interest rate hike expectations in the U.S. could weigh on risk assets such as the Euro, as traders favour safe-haven assets due to their higher-yielding potential.
Sources: Reuters, Bank of Japan, Markit Economics, TradingView