EUR/JPY Could Face 124.43 Next, 125.00 Level in Focus

The pair containing the single European currency and the Japanese yen has been in the spotlight for various reasons recently. It has seen some significant drops in value in recent times – a move that has been symptomatic of the euro generally. The pair saw more than three percentage points wiped off its value over the course of September. However, there could be some hope on the horizon for those traders who are looking for this pair to improve in value.

The Relative Strength Index is just one of several metrics for traders of this pair to observe. However, according to a close reading of the price charts, it appears that the pair has made a distinctive move away from overbought status. Several other perspectives on the chart have indicated something similar. There was no certainty among analysts as to where the pair might go next though.

According to some strategists, one option could be for the currency to head towards the 124.43 level. From there, it would need to break the key 125.00 point if it wanted to advance further. This, analysts suggested, could then ultimately lead on to 127.07. If it were to head in the other direction, however, analysts believe that it would need to go towards the 122.00 point. From there, it may become the case that the 119.04 level is in play.

Moving away from technical analysis, the EUR/JPY pair will also need to go through some key fundamental tests in the coming days. Tuesday morning will see consumer confidence figures out of Europe at 9am GMT, covering the month of September. This is set to show no difference from its previous recorded position of -13.9. In the same time slot, there will be a business climate release, again covering September. This is set to show a tiny dip across the bloc, this time from -1.33 to -1.38. Later in the day, Germany will be brought into sharp focus when its preliminary harmonised index of consumer prices for September is released at 12pm GMT. This is expected to show no year-on-year change from its previous position of -0.1%. Month on month, however, it is due to go from -0.2% to -0.1%.

On Wednesday, meanwhile, there will be a retail sales data release for August out of Germany. This is once again expected to show no year-on-year change from its previous position, which is 4.2% – suggesting that while the German economy may not be profoundly suffering, it is certainly not showing signs of a surge. This is due at 6am GMT. French consumer spending for August will be out at 6:45am GMT. This is expected to show a change from half a percentage point to -0.1%. A speech from Christine Lagarde, who leads the European Central Bank, will take place at 7:20am GMT.

Nigel Frith

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