EURJPY Consolidates Under Key Technical Confluence Zone – 20th November
(Euro/Yen Analysis, Forex-FX-4X, 20th November 2012)
- EUR/JPY is consolidating recent gains under a key technical confluence zone. This “zone” held during the late October rejection from resistance highs and has the following technical levels closely aligned:
- The 105.00 psychological round number.
- 38.2% and 61.8% Fibonacci retrace levels.
- Previous price structure resistance highs (see the daily timeframe chart below).
- This currency pair is now essentially trading within a near 400 pip range and price action around the current trading level could be key in terms of gaining a near term directional bias. The corrective risk is for a reversion to the the recent range if the confluence area holds on a break above recent highs.
- The euro dropped last night versus most currency majors when Moody’s lowered France’s govt bond rating, but has staged a recovery during this morning’s european trading session.
When referencing related currency pairs we note the following:
- Euro/dollar is trading around the 1.2800 previous support lows, which are now seeing an element of resistance. A strong close above EUR/USD 1.2800 or EUR/JPY 105.00 could be indicative of further EUR upside potential versus major currency counterparts.
- The USD/JPY is trading just under the 61.8% Fibonacci retrace of 84.17 - 77.12. The dollar/yen had rallied from close to the weakest level in around seven months (81.58) when Governor Masaaki Shirakawa, from the BoJ, said recent proposals to aggressively weaken the Japanese currency were “unrealistic”. Nonetheless, downside pressure remains on the yen in the near term.