Up ahead is a slew of low to mid-tier economic updates from both Japan and the Euro area that may keep EUR/JPY moving in its current rising channel.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a potential short setup on USD/JPY ahead of the Fed meeting minutes, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Japan Current Account at 11:50 pm GMT
Japan Consumer Confidence, Eco Watchers Survey at 5:00 am GMT (Apr. 8)
Germany Factory Orders at 6:00 am GMT (Apr. 8)
France Trade Balance, Current Account at 6:45 am GMT (Apr. 8)
Euro area Construction PMI at 7:30 am GMT (Apr. 8)
U.K. Construction PMI at 8:30 am GMT (Apr. 8)
Euro area PPI at 9:00 am GMT (Apr. 8)
ECB Monetary Policy Meeting Accounts at 11:30 am GMT (Apr. 8)
What to Watch: EUR/JPY
On the one hour chart of EUR/JPY, we’ve got a textbook channeling pattern, favoring the bulls over the past week. Traders have been buyers on the dips, and with the pair already falling lower after another retest of the top of the channel, we could see dip buyers hopping back in once again.
Looking at the calendar above, we can see plenty of potential economic catalysts for both currencies to keep the pair move. But given that they’re mostly lower tier events, it’s likely we’d have to see a broad consensus (i.e., all positive euro updates or all positive Japanese updates) to really get the needle moving on on either currency.
With that said, given the reaction to the better-than-expected Euro area services PMI updates today, if we see more positive data from Europe later, the odds are pretty good the pair will continue to move higher from current levels.
For those EUR/JPY bulls who are more conservative, it’s probably a good idea to wait for the data for confirmation, and if you wait, you may even get a pullback lower to the bottom of the channel to get you in at better prices. With a daily ATR of around 63 pips, EUR/JPY does have the potential to retest the 130.00 major psychological handle by the next session.
Of course, if economic data sours and/or we get a broad move in global sentiment towards negative, that may quickly benefit the Japanese yen, and if 130.00 is retested in this scenario, be on the look out for a break of the rising ‘lows’ pattern. That could draw in technical / momentum sellers if the catalyst for risk-off moves is big enough.