EURJPY has been trending lower on its daily time frame, moving inside a descending channel formation and currently testing the resistance. Applying the Fib tool on the latest swing high and low also shows that the channel resistance lines up with the 61.8% Fibonacci retracement level.
The channel resistance seems to be keeping gains in check for now and might send the pair back down to the channel support at 105.00 or to the previous lows at 109.00. However, the 100 SMA is closing in on the 200 SMA and is attempting to make an upward crossover, possibly drawing more buyers to the mix.
Stochastic is on the move down to indicate that sellers are in control of price action, but the oscillator is approaching the oversold zone so bears might need to take a break and let buyers take over. If so, an upside channel breakout and downtrend reversal could be possible.
The main event risk for the day is UK Prime Minister Theresa May’s speech in which she is expected to detail the government’s Brexit negotiation plan. In her previous testimonies, she mentioned that they are willing to give up access to the single market in exchange for autonomy when it comes to immigration and European Court of Justice rulings, something that could weigh heavily on UK trade and investment.
Still, May is expected to reassure the public that they will seek trade arrangements with other nations in order to keep the economy afloat. If her words manage to keep confidence supported, EURJPY might be able to push for more gains. On the other hand, fears about a slowdown in the entire region could mean more losses for the pair.
Euro zone data has been mostly stronger than expected lately while Japan’s figures have been mixed. Its tertiary industry index came in line with expectations of a 0.2% uptick while its preliminary machine tool orders indicated a 4.4% rebound over the earlier 5.6% decline.