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EUR/JPY Bounces Off Support – European CPI Picks Up

Posted Thursday, July 11, 2019 by
Arslan Butt • 2 min read

The single currency Euro gains momentum against its peers on the release of better than expected inflation reports from German and France. Ultimately, the EUR/JPY pair soared to trade around 121.900 after testing the support around 121.600. Before we move to the technical setup, let’s take a quick look at the fundamental side of the market.

As per the Federal Statistical Office (Destatis) report, the German inflation rate was slightly up, scoring 1.6% in June 2019.
Whereas, it had been +1.4% back in May 2019. Compared with May 2019, the consumer price index rose by 0.3% in June 2019.

On the other hand, the French Final CPI grew at a rate of 0.2% over a month, after +0.1% in May 2019. This increase, barely stronger than in the previous month, came from a rebound, over a month, in services prices (+0.5% after −0.2%), partly offset by a slight downturn in energy prices.

Whereas a former state banker Akira Kondoh remarked on Prime Minister Shinzo Abe’s pro-growth policies. Akira Kondoh said the Bank of Japan’s (BOJ) focus on keeping the Yen weak has made the Japanese executives complacent and hurt corporate competitiveness. It’s sort of a negative remark from the former state banker and can weigh on the Japanese yen.

EUR/JPY – Technical Outlook
On the technical outlook side, the pair has gained support around 121.600 on the 2-hour timeframe. While the 50 and 100 periods EMA are extending resistance at 121.950 level.

The trading range of EUR/JPY is a bit narrow as it trades within 122.350 – 121.600 range these days. Until the market breaks out, we may see this consolidating with the same range. The pair has also formed sort of a bearish flag which supports it around 121.750 while the resistance stays the same at 122.350.

The idea today is to stay bearish under 122.350 and bullish above 121.650 with a 20 pips stop loss and 50 pips take profit on both sides. Good luck!

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