The currency pair has finally decided to drop again on the short term and seems determined to reach fresh new lows again. It is trading in the red and on the short term and resumed the last day’s drop, price erased the morning gains and is approaching a very strong dynamic support. The Yen has increased somehow surprisingly versus the Euro as the Nikkei stock index has rallied and has touched fresh new highs. However, the current Yen’s increase is natural as the JP225 slipped lower in the last hours, but you should know that the index maintains a bullish perspective on the short term, we don’t have a reversal signal yet.

The Yen dropped in the morning, even if the Japanese Average Cash Earnings increased by 0.9% in September, beating the 0.6% estimate and the 0.7% growth in the former reading period.  On the other hand, the Euro-zone data have come in mixed today, the German Industrial Production dropped by 1.6% in September, more versus the 0.7% estimate, while the Euro-zone Retail PMI was reported at 51.1 points, lower versus the 52.3 in the former reading period. The European currency received support from the Retail Sales, which increased by 0.7%, beating the 0.6% and from the Italian Retail Sales, which increased by 0.9%, exceeding the 0.2% estimate.

The currency pair dropped and should reach the upper median line (UML) of the major ascending pitchfork. Price failed to retest the outside sliding parallel line (SL) of the major red ascending pitchfork signaling that the bears could take full control again.

A valid breakdown below the UML will signal a further drop on the short term, technically is still expected to drop significantly after the breakout from the Rising Wedge pattern. You can see that the rate failed to retest the chart pattern, so it could drop much deeper. We’ll see what will really happen because the Nikkei has reached fresh new highs today and maintains a bullish perspective.