Inflationary pressures in the Eurozone remain tame, as evident over the past two days with CPI readings out of Spain, France, and Germany. The ECB is failing its mandate of price stability, and more opposition to its quantitative easing and negative interest rates amasses. Economic data remains overall weak across the Eurozone, but the EURJPY advanced to the upper band of a strong horizontal resistance area. Will bulls attempt a breakout, or can bears force a breakdown? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Japanese machine orders surprised economists with a strong advance for November, more than erasing October’s contraction. The signing of the partial trade deal between the US and China is concluded, with doubts immediately emerging. Disappointed forex traders may rush to the safe-have Japanese Yen, adding to rising bearish momentum in the EURJPY. Where is this currency pair headed to next? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
Here is the key factor to keep in mind today for Euro trades:
- Final German CPI: The Final German CPI for December increased by 0.5% monthly, and by 1.5% annualized. Economists predicted an increase of 0.5% and 1.5% annualized. Forex traders can compare this to the previous German CPI for December, which increased by 0.5% monthly and 1.5% annualized. The EU Harmonized German CPI for December increased by 0.6% monthly, and by 1.5% annualized. Economists predicted an increase of 0.6% and 1.5%. Forex traders can compare this to the previous EU Harmonized German CPI for December, which increased by 0.6% monthly and 1.5% annualized.
Here are the key factors to keep in mind today for Japanese Yen trades:
- Japanese Machine Orders: Japanese Machine Orders for November increased by 18.0% monthly and 18.0% annualized. Economists predicted an increase of 2.9% monthly and a decrease of 5.4% annualized. Forex traders can compare this to Japanese Machine Orders for October, which decreased by 6.0% monthly, and by 6.1% annualized.
- Japanese Domestic Corporate Goods Price Index: The Japanese Domestic Corporate Goods Price Index for December increased by 0.1% monthly, and by 0.9% annualized. Economists predicted an increase of 0.1% monthly and 0.9% annualized. Forex traders can compare this to the Japanese Domestic Corporate Goods Price Index for November, which increased by 0.2% monthly, and by 0.1% annualized.
Should price action for the EURJPY remain inside the or breakdown below the 122.200 to 123.000 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 122.700
- Take Profit Zone: 119.650 – 120.150
- Stop Loss Level: 123.300
Should price action for the EURJPY breakout above 123.000 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 123.300
- Take Profit Zone: 124.250 – 124.750
- Stop Loss Level: 123.000
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