EUR/JPY Weekly Outlook

EUR/JPY Weekly Outlook

EUR/JPY's fall from 126.03 continued last week and outlook remains unchanged. That is, correction pattern from 127.70 is still in progress and deeper decline would be seen to 118.71 support and below. Nonetheless, we'd expect downside to be contained by 117.04 (38.2% retracement of 100.32 to 127.70 at 117.24) to complete the consolidation. Meanwhile above 121.86 minor resistance will turn bias back to the upside for retest 126.03 resistance first.

In the bigger picture, whole down trend from 169.96 (2008 high) has completed at 94.11 already, on bullish convergence condition in weekly MACD. Rise from there isn't finished yet and is expected to continue to 50% retracement of 169.96 to 94.11 at 132.03 next. Eventually, such rise would likely extend to 139.21 resistance and above. And, we'll stay bullish as long as 111.43 resistance turned support holds.

In the long term picture, the down trend from 169.96 is viewed as a corrective move even though it's very deep comparing to the rise from 88.96 (00 low). Strong support did happen above 88.96 and the medium term trend should have reversed. It's a bit early to judge whether rise from 94.11 would develop into an impulsive move, or a corrective move that's part of a range pattern. But in either case, a break of 139.21 resistance is expected in medium to long term.