EUR/JPY has been quite impressive amid the recent bearish pressure after a retracement towards 130.50 area with a daily close. EUR is struggling to sustain momentum against JPY due to downbeat economic reports. The pair is expected to carry on with a downward movement in the coming days.
EUR has been weighed down by Italy's trade deficit issue which undermined the overall eurozone's economy. Italy has been trying to assure the EU authorities that the deficit is not harmful to the eurozone's economy as the government has proposed a budget draft for 2019, but the European Commission is still not convinced with the solutions, suggested by Italy's government to tackle the problem. As long as this issue remains unsolved, EUR may lose favor among investors. Today Italian Industrial Production report was published with a decrease to -0.2% from the previous value of 1.7% which was expected to decrease more to -0.5%. Though the result was better than expected, it did not quite help the currency to sustain the market momentum. Ahead of several macroeconomic reports and ECB President Draghi's speech on Friday, EUR is expected to be trade with higher volatility.
On the JPY side, despite a series of lackluster economic reports, JPY gained momentum over EUR that indicates ongoing weakness of EUR. Today Japan's PPI report was published with a decrease to 2.9% from the previous value of 3.0% while performing slightly better than expectation of 2.8% and Prelim Machinery Tools Orders decreased to -1.1% from the previous value of 2.9%. Ahead of macroeconomic reports like Prelim GDP and Tertiary Industry Activity, downbeat forecasts may push JPY down.
Meanwhile, EUR is struggling for gains. Japan's downbeat reports may cause higher volatility in the coming days. On the other hand, any positive report from Japan may lead to impulsive bearish swings. ECB President Draghi's speech on Friday is another market-moving event, so that the pair may go through correction. In case Japan presents better-than-expected reports, this could lead to further downward momentum.
Now let us look at the technical view. The price is currently residing inside the support area between 127.60-128.50 area from where there are certain chances that the price could climb higher towards 129.50-130.00. As the current momentum is quite impulsive with the bearish pressure, a break below 127.60 area is required for further bearish momentum in this pair with a target towards the support area of 125.50 in the coming days. As the price remains above 127.60-128.50 area, there are chances that the price could rebound. Otherwise, the bearish pressure will continue.
SUPPORT: 125.50, 127.60
RESISTANCE: 128.50, 129.50, 130.00
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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