Eurozone Inflation Slips, another Headwind for EUR/JPY

Posted Thursday, May 3, 2018 by
Arslan Butt • 1 min read

The single currency euro got another hit after delivering worse than expected in the CPI figures. Inflation unexpectedly slid in April as prices of services rose at a moderate pace, raising questions about the European Central Bank’s policy for a gradual removal of a monetary stimulus.

ECB is targeting a 2% inflation rate, but as of Jan 2018, they are consistently deliveringnegative figures. Just today, the inflation of 19 countries fell down to 1.2% vs. the 1.3% previous level. There’s not much movement in the market, but it’s still leaving a question mark regarding the ECB’s effort to meet the 2% inflation target.

EUR/JPY - 2 Hour Chart

EUR/JPY – 2 Hour Chart

Technically speaking, the bearish trendline of the 2 – hour chart is providing solid resistance at 131.600. As per the 50- period EMA, the EUR/JPY is trading on a bearish trend and that’s why we should be looking for bearish trades. The RSI is also holding below 50, supporting the selling bias of investors.

EUR/JPY – Trading Plan

In addition to the fundamentals and technical reasons discussed above, we open a forex trading signal to sell EUR/JPY after a formation of dojicandle below 131.580. The pair is likely to target 131 and 130.850. Good luck!

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