EUR/JPY plunged today and seems determined to reach new lows in the upcoming period. Price continues to move sideways on the daily chart, but it could decrease on the short term after the failure to pass above the near-term dynamic resistance levels.
It has decreased somehow surprisingly as the Nikkei is fighting hard to stay higher. I’ve said in the previous days that the JP225 could decrease again in the upcoming period after the temporary rebound. The Nikkei’s further drop will force the Yen to dominate the currency market.
The Japanese banks were closed today in observance of the Labor Thanksgiving Day. The Euro was punished by the poor Euro-zone economic data. The Flash Services PMI decreased from 53.7 to 53.1 points, much below the 53.6 estimate, while the Flash Manufacturing PMI was reported at 51.5, below the 52.0 estimate and below the 52.0 in the former reading period, signaling that the expansion has slowed down.
The German Flash Services PMI decreased from 54.7 to 53.3 points, much below the 54.6 estimate, while the Flash Manufacturing PMI decreased from 52.2 to 51.6, even if the traders have expected to see an increase to 52.3 points. The German Final GDP dropped by 0.2%, matching expectations.
EUR/JPY plunged after the failure to test and retest the median line (ml) of the minor ascending pitchfork. You can see that it moves sideways between the 133.486 and the 124.647 level. The failure to approach and reach the sideways movement resistance could send the rate down again towards the lower median line (LML) of the major ascending pitchfork.
The downside 50% Fibonacci line of the ascending pitchfork represents a very strong dynamic support, so a valid breakdown will signal a further drop. Support can be found at the lower median line (lml) as well.