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3 Sep 2015
EUR/JPY: a recovery to come from here after dovish ECB damage?
FXStreet (Guatemala) - EUR/JPY gave way to the bulls on the ECB being so blunt in respect of the risks to growth and inflation in the EZ economy ahead and the subsequent measures that would be necessary in coming months of conditions do not improve.
EUR/JPY is consolidating the free-fall from the time of the ECB's announcements from the vicinity of the hourly 20 SMA at 135.05 down to the lows of the European and US session of 133.12.
In the previous hour, the cross has been trading between a range of circa 50 pips, 1.3329/74 with hourly MACD looking overstretched and hourly RSI (14) in highly oversold territory at 17.95, all suggesting a bottom for the time being while USD/JPY bulls have committed at the lows of 119.63 and regained territory on the 120 handle marking a high in the minor recovery of 120.38 in the last hour and back into line of the hourly 200, 50 and 20 SMA's.
The next main events will be the Nonfarm Payrolls, and following from a strong Non-Manufactiring ISM number today ( 59.0 vs 58.2 expected), should the Nonfarm Payrolls number be in line or better than expectations, or just not significantly worse than expectations, an improvement in risk sentiment, while China is absent for the next three trading days and markets continue to discount a certain rate hike in September bolstering Wall Street (S&P 500 and futures currently up by nearly 1%) , should underpin a recovery in the cross while USD/JPY continues to target the key 200 DMA at 120.70 for a bullish signal.
On the other hand, the Yen will garner strength on continued uncertainty and the risk comes with the G20 meeting where China will be a key topic between Central Bankers and today's move takes us down through May lows and down to challenge the up trend from April's business earlier this year that commenced below 128.00.
EUR/JPY is consolidating the free-fall from the time of the ECB's announcements from the vicinity of the hourly 20 SMA at 135.05 down to the lows of the European and US session of 133.12.
In the previous hour, the cross has been trading between a range of circa 50 pips, 1.3329/74 with hourly MACD looking overstretched and hourly RSI (14) in highly oversold territory at 17.95, all suggesting a bottom for the time being while USD/JPY bulls have committed at the lows of 119.63 and regained territory on the 120 handle marking a high in the minor recovery of 120.38 in the last hour and back into line of the hourly 200, 50 and 20 SMA's.
The next main events will be the Nonfarm Payrolls, and following from a strong Non-Manufactiring ISM number today ( 59.0 vs 58.2 expected), should the Nonfarm Payrolls number be in line or better than expectations, or just not significantly worse than expectations, an improvement in risk sentiment, while China is absent for the next three trading days and markets continue to discount a certain rate hike in September bolstering Wall Street (S&P 500 and futures currently up by nearly 1%) , should underpin a recovery in the cross while USD/JPY continues to target the key 200 DMA at 120.70 for a bullish signal.
On the other hand, the Yen will garner strength on continued uncertainty and the risk comes with the G20 meeting where China will be a key topic between Central Bankers and today's move takes us down through May lows and down to challenge the up trend from April's business earlier this year that commenced below 128.00.