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- EUR/JPY Technical Strategy: Flat
- Support: 140.50 (rising trend line)
- Resistance: 141.75 (38.2% Fib exp.), 142.73 (falling trend line)
The Euro may be readying to turn higher against the Japanese Yen after prices produced a bullish Piercing Line candlestick pattern above trend line support from mid-February. A daily close above initial resistance at 141.75, the 38.2% Fibonacci expansion, exposes a downward-sloping trend line resistance at 142.73. Trend line support is now at 140.50.
While risk/reward considerations allow for a long position at current levels, we will tactically opt to stand aside. Prices continue to show a strong correlation with the S&P 500 (on rolling 20-day studies). The benchmark equity index has corrected higher over the past two days but the bounce appears corrective, warning that renewed weakness may pull EUR/JPY lower amid broader risk aversion.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com