FX Play of the Day: EUR/JPY Uptrend Correction Ahead of PMIs

Forex News FX

I’m seeing a steady climb on EUR/JPY!

Could this pair use a correction before the flash PMIs are printed, though?

Looking at the top-tier market catalysts on deck suggests that the global PMI readings might set the tone for risk-taking for the week ahead.

EUR/JPY 15-min Forex Chart by TV

Number crunchers are predicting slight improvements in the manufacturing and services sectors of Germany and France, so we might see an uptick for the shared currency in that case.

Stronger than expected figures might even be enough to boost risk appetite early in the week, dragging the lower-yielding yen down.

Before all that, EUR/JPY could still go for a dip to the nearby support levels seen on the short-term time frame.

The pair has formed higher lows and higher highs connected by an ascending channel that’s been holding for more than a week now.

A large correction could reach the channel support at S1 (156.21) to attract more buyers to sustain the rally, but a break below this could signal a reversal.

If euro bulls are eager to charge, EUR/JPY might already find support at the 38.2% Fibonacci retracement level that lines up with the pivot point (157.13) or the 50% retracement near the middle of the channel.

If any of these hold as a floor, the pair could resume the climb to the swing high near the 158.00 handle and the channel top. Sustained upside momentum might even take it up to R1 (158.67) or R2 (159.59).

Stochastic is still on the move down, so price could follow suit until oversold conditions are met. Meanwhile, the 100 SMA is above the 200 SMA to hint that the uptrend is more likely to gain traction than to reverse.

Don’t forget also that the ECB is widely expected to announce another 0.25% hike in its rate statement later this week while the BOJ is likely to maintain its easy monetary policy.

Do you think EUR/JPY is in for a steeper climb from here?

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.

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