The EUR/JPY dropped today and is trying to delete the yesterday’s gains, remains to see what will happen because the perspective remains somehow bullish on the short term. Price has dropped, even if the Nikkei stock index has increased a little today, is very important to see what will happen on the Nikkei in the upcoming period because a further increase will send the Yen much lower versus all its rivals.
The JP225 may drop again after the false breakout above the 20058 static resistance, the minor increase could be considered a retest of some important resistance levels, has shown some exhaustion signs on Monday when has plunged and has invalidated the breakout above the 20058 static resistance. Only a valid breakout above the 20058 resistance and an increase above the 20231 previous high will confirm a further Nikkei’s increase.
The Yen will drop if the JP225 will have enough directional energy to resume the upside movement, but technically the index looks a little exhausted on the short term, but we need a confirmation that we’ll have another leg lower, the perspective is bullish right now.
The Euro has also dropped versus the greenback and versus the Cable today, not only versus the Yen, even if the Euro-zone data have come in better, the German Industrial Production rose by 0.8% in April, beating the 0.6% estimate, the production has increased sharply after the 0.1% drop in the previous reading period, while the French Trade Balance dropped from -4.8B to -5.5B, but has come in better versus the -5.9B estimate. Moreover the Euro-zone Revised GDP increased by 0.6%, beating the 0.5% estimate, as you already know, the European Central Bank has decided to maintain the Minimum Bid Rate unchanged at 0.00%, matching expectations.
The Japanese data have come in mixed, the Economy Watchers Sentiment surged from 48.1 to 48.6 points, matching expectations, while the Final GDP Price Index decreased by 0.8%, matching expectations as well. The Final GDP has disappointed in the Q1 because has increased only by 0.3%, less versus the 0.6% estimate and versus the 0.5% growth in the former reporting period, but the currency has received a helping hand from the Current Account economic indicator, which has increased from 1.73T to 1.81T, beating the 1.62T estimate, moreover the Bank Lending has come in better as well, has increased by 3.2%, exceeding the 3.0% forecast.

Price registered an important move today, but looks undecided what to do next, will be better to stay away from this pair until we'll have a clear direction. The current drop was expected after the failure to climb above the 125.80 previous high, has also failed to stabilize above the first warning line (WL1) of the major descending pitchfork, signalling an exhaustion on the short term. We'll have a buying opportunity if will jump and will stabilize above the WL1, could increase further if will fail to retest the median line (ml). A selling opportunity will appear if the rate will slip and will stabilize below the median line and below the 50% retracement level, so if you want to go short will be better to wait for a valid breakdown below these obstacles.

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