EURJPY Correction Underway
The 130.69 breakout trade in EURJPY traded as high as the 134.42 level. Price is now starting to correct lower, with the RSI coming off and the MACD having turned bearish, risks of a deeper correction are building. Below the 133.13 level, the bear target is the rising channel low and the 132.02 level. Longer term, while the 132.02 level holds, the bull channel remains intact and I will be monitoring that area for bullish entry signals, targeting a continuation towards 135.68 and above.
Key Data to Watch
The main event risk this week is of course the June ECB meeting. The big question over the year so far has been whether the ECB will begin tapering this year. Given the improving fundamental backdrop and rising inflation expectations, traders are focusing on whether the ECB will announce a reduction in bond purchases this week. If it does so, EUR is likely to reverse firmly higher.
However, if purchases are maintained, EUR is likely to come off. The extent of the move in either direction will depend on the forward guidance offered. If the ECB downplays upside economic risks and focuses on remaining uncertainty, this should keep EUR upside limited. A deeper acknowledgement of upside risks, however, could see EUR firmly higher.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.