EUR/JPY slump despite positive economic figures – What’s going on?
Arslan Butt • 1 min read
The financial market continues to surprise investors with bearish reversals on the bullish news. Germany exported goods to the tune of 105.2 billion Euros and imported goods to the value of 88.1 billion Euros in August 2018, which has generated a trade surplus of 18.3 billion.
Despite the positive news, the single currency Euro plunged dramatically not only against the dollar but also against the Japanese Yen. Traders are closely observing the political situation in Italy, where anxieties are rising between Rome and Brussels over the new alliance government’s first budget and deficit targets.
As per the recent update, Italy’s populists are targeting a deficit of 2.4% of gross domestic product (GDP) next year, and say they will perpetrate to a slide to 2.1% in 2020 and 1.8% in 2021.
As a result, the market has knocked our EUR/JPY trading signal at stop loss. For the moment, the pair has formed a bullish butterfly pattern on the hourly chart which is suggesting a potential reversal in the market. Yet, the immediate support is at 129.035 and 128.750.
We can expect a slight reversal above 128.750 today and that’s where I will be looking to take a second entry. Good luck and stay tuned to FX Leaders for more signals!