The rate increased significantly and seems determined to reach a very strong dynamic resistance in the upcoming days. The Yen dropped even if the Nikkei stock index has dropped aggressively in the last hours and have erased the earlier gains.
A Nikkei’s further drop will force the Yen to appreciate versus all its rivals, so the EUR/JPY could drop again and could delete the current rebound. Technically, it was somehow expected to drop further on the short term, but the Nikkei’s rebound has sent the Yen lower versus the other major currencies.
The rebound could be temporary and the rate could drop again, but we still need a confirmation that the rate will drop further, right now will be better to stay away because we don’t have a trading opportunity.
The Japanese PPI rose by 2.5%, matching expectations, while the Tertiary Industry Activity dropped by 0.6%, more versus the 0.2% estimate and after the 0.0% growth in the former reading period. The Euro was supported by the French Final Private Payrolls, which increased by 0.4%, more versus the 0.3% estimate and versus the 0.3% growth in the former reading period, while the Italian Quarterly Unemployment Rate decreased from 11.2% to 11.0%, matching expectations.
The EUR/JPY increased and resumed the minor rebound. You can see that it has found temporary support at the 150% Fibonacci line (ascending dotted line) of the minor ascending pitchfork. It could be attracted by the upper median line (UML) of the major red ascending pitchfork. We’ll have a selling opportunity if the rate will make a valid breakdown below the 150% Fibonacci line, the next downside targets will be at the median line (ML) of the ascending pitchfork and at the first warning line (wl1) of the blue ascending pitchfork.