Safe-haven currencies, including the dollar which strengthened against the euro yesterday, draw market’s attention again. The greenback managed to improve its position amid uncertain financial situation and strikes in Spain.
The trading session closed to the good of the dollar which gained 26 points against the euro, the volatility was 78 points.
Fundamental Review:
According to Ministry of Labor in France, the unemployment rate grew 0.8% in August in contrast to July totaling 3,011,000 people. Last year in August the indicator accelerated 9.2%.
Disappointing data on the US house market pressured the single currency even more. Thus, new home sales declined modestly in August.
According to Department of Trade and Commerce in the USA, new home sales lost 0.3% against July to 373,000 houses a year. Economists expected that the indicator will demonstrate the reading of 380,000 houses a year.
Technical Analysis:
It is too early to tell about critical change in downtrend of EUR/JPY pair. However, during today’s Asian session the pair demonstrates a stable growth. The trading is performed in descending price channel which lower borderline is placed at 25th September low (1.2885) and at yesterday’s minimum of 1.2834. The upper limit of this channel crosses 21th September high at 1.3047 and 25th September high at 1.2970.
The level of 1.2836 turned to be too strong for bears who failed yesterday to break it through. Now the first support is at 1.2871. In case this level is broken, the pair will reach 1.2836 and will test 1.2814 there.
20-day moving average is still below 60-day moving average which is indicative of downtrend.
1.2903 is an important resistance level for now. If the pair breaches it, we will observe a short-term upward channel and growth towards 1.2927. The furthest target is at 1.2961.
Bollinger Bands demonstrate the descending move on the pair and are heading to the downside. However, the trading is carried out in the upper part of the channel and the middle line placed at 1.2868 serves as dynamic support level.
MACD indicator cannot fix above zero level. The market is dominated by bears right now and the euro prospects are not clear now. However, 1.2871 and 1.2836 levels are crucial for long positions that is why I recommend to pay more attention to them. As soon as the market will give us signs of uptrend, open positions above these levels.

Key support and resistance levels for today:
Support levels: 1.2871, 1.2836, 1.2814
Resistance levels: 1.2903, 1.2927, 1.2961
60-day Moving Average (yellow line) – 1.2896
20-day Moving Average (green line) – 1.2868