July 2 - Update - Short EURJPY -- Trade Entered at 128.85
Original Analysis - June 26 - Below:
The global risk-off move is being fuelled by US President Trump slapping tariffs and trade barriers on two of the world’s biggest economies, China and the EU. And it is against this background that we look to go short EURJPY with the EUR under pressure from tariffs, amongst other things, while JPY is currently the favoured risk-off asset, ahead of CHF and gold. Current EUR negatives include potential US tariffs on its huge automobile sector, weakening growth, lowly inflation and a dovish monetary policy that is unlikely to see any rate hikes until at least Q3 2019. In addition, German Chancellor Angela Merkel, one of the rocks of the EU, is under pressure at home from within her coalition government to curb migration, while the new populist government in Italy refuses to let migrant boats dock.
DAX 30 – US Trade Fears and Auto Blues
USDJPY Hit by Trade War Rhetoric; Technical Indicators Collide
On the technical front, EURJPYlooks set to push lower after making three lower highs in the last two months. We look to open the trade at what we think may become the fourth lower high and the 38.2% Fibonacci retracement level at 128.85and have a stop-loss at the third lower high – a break of which would invalidate the set-up – at 130.40. We set targets at 124.60 and 123.50 and would move our stop-loss down to our entry price on hitting our first target. The negative picture is given further credibility with the pair currently trading below all three moving averages, while the RSI is mid-market but pointing lower.
EURJPY Daily Price Chart (May 2017 – June 26, 2018)
EURJPY - Pending Short as Trade Wars Escalate
Entry Point: Pending short at 128.85
Target 1: 124.60 (May 29 low)
Target 2: 123.50 (61.8% Fibonacci Retracemnt)
Stop-Loss: 130.40 (June 14 high)
Original Analysis - June 26 - Below:
The global risk-off move is being fuelled by US President Trump slapping tariffs and trade barriers on two of the world’s biggest economies, China and the EU. And it is against this background that we look to go short EURJPY with the EUR under pressure from tariffs, amongst other things, while JPY is currently the favoured risk-off asset, ahead of CHF and gold. Current EUR negatives include potential US tariffs on its huge automobile sector, weakening growth, lowly inflation and a dovish monetary policy that is unlikely to see any rate hikes until at least Q3 2019. In addition, German Chancellor Angela Merkel, one of the rocks of the EU, is under pressure at home from within her coalition government to curb migration, while the new populist government in Italy refuses to let migrant boats dock.
DAX 30 – US Trade Fears and Auto Blues
USDJPY Hit by Trade War Rhetoric; Technical Indicators Collide
On the technical front, EURJPYlooks set to push lower after making three lower highs in the last two months. We look to open the trade at what we think may become the fourth lower high and the 38.2% Fibonacci retracement level at 128.85and have a stop-loss at the third lower high – a break of which would invalidate the set-up – at 130.40. We set targets at 124.60 and 123.50 and would move our stop-loss down to our entry price on hitting our first target. The negative picture is given further credibility with the pair currently trading below all three moving averages, while the RSI is mid-market but pointing lower.
EURJPY Daily Price Chart (May 2017 – June 26, 2018)
EURJPY - Pending Short as Trade Wars Escalate
Entry Point: Pending short at 128.85
Target 1: 124.60 (May 29 low)
Target 2: 123.50 (61.8% Fibonacci Retracemnt)
Stop-Loss: 130.40 (June 14 high)