Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Japanese Jobless Rate for February came in at 2.7%, and the Job-to-Applicant Ratio at 1.21. Economists predicted a figure of 2.8% and 1.20. Forex traders can compare this to the Japanese Jobless Rate for January, reported at 2.8%, and the Job-to-Applicant Ratio at 1.20.
The German Import Price Index for February increased 1.3% monthly and 26.3% annualized. Economists predicted an increase of 1.8% and 26.9%. Forex traders can compare this to the German Import Price Index for January, which increased 4.3% monthly and 26.9% annualized.
The German GfK Consumer Confidence Survey for April came in at -15.5. Economists predicted a figure of -14.0. Forex traders can compare it to the German GfK Consumer Confidence Survey for March at -8.5. French Consumer Confidence for March is predicted at 94. Forex traders can compare it to French Consumer Confidence for February at 98.
Forex traders carefully monitor how the Bank of Japan will react to the collapsing Japanese Yen following comments of bad Yen weakening by the central bank. The Bank of Japan continues its dovish monetary policy and buys Japanese bonds to defend its 0.25% yield target through its yield curve control (YCC) mechanism. After the Japanese Yen hit seven-year lows intra-day and closed at six-year lows, Japan noted close communication with the US on currency issues. Some traders fear that the Japanese Yen could collapse below levels seen during the 1998 Asian financial crisis, which prompted the Bank of Japan to bail out its banks, a move the US repeated in 2008 during the global financial crisis.
The forecast for the EUR/JPY remains cautiously bearish following a massive advance over the past four weeks spanning 1,320 pips. Traders should remain cautious, but the latest D1 candlestick suggests a reversal may follow. Adding to downside pressures is the flat Kijun-sen, pointing towards a lack of short-term bullishness. The Tenkan-sen moves higher, but the Ichimoku Kinko Hyo Cloud suggests the rally is overdone and that a mean reversion is pending. Another significant bearish signal is the negative divergence in the CCI, which formed in extreme overbought territory, where a breakdown below 100 could trigger a sell-off. Can bears reverse the bullish stampede and pressure the EUR/JPY into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the EURJPY remain inside the or breakdown below the 135.300 to 136.500 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 135.750
- Take Profit Zone: 130.350 – 131.150
- Stop Loss Level: 137.750
Should price action for the EURJPY breakout above 136.500, PaxForex recommends the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 137.750
- Take Profit Zone: 139.950 – 141.000
- Stop Loss Level: 136.500
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