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EUR/JPY is knocking on a key resistance area!

Will the eurozone’s PMI reports inspire an upside breakout for the pair?

Before we check out the setup, take a look at the top headlines during the Asian session:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • Spain’s manufacturing PMI at 7:15 am GMT
  • Switzerland’s manufacturing PMI at 7:30 am GMT
  • Italy’s manufacturing PMI at 7:45 am GMT
  • France’s final manufacturing PMI at 7:50 am GMT
  • Germany’s final manufacturing PMI at 7:55 am GMT
  • Eurozone’s final manufacturing PMI at 8:00 am GMT
  • Italy’s unemployment rate at 8:00 am GMT
  • U.K.’s final manufacturing PMI at 8:00 am GMT
  • U.K.’s mortgage approvals and net individual lending at 8:00 am GMT
  • Eurozone’s CPI estimates at 9:00 am GMT
  • Canada’s manufacturing PMI at 1:30 pm GMT
  • U.S. ISM manufacturing PMI at 2:00 pm GMT

What to Watch: EUR/JPY

EUR/JPY 1-hour Forex Chart
EUR/JPY 1-hour Forex Chart

EUR/JPY is now trading in a 200-pip or so range after seeing a steady uptrend in the last couple of weeks.

The 126.75 handle is the level to watch especially as major Eurozone economies print their manufacturing PMIs today. If their Asian counterparts are any indication, then we could see extended recoveries in the region’s manufacturing sector.

Meanwhile, vaccine and stimulus headlines should keep the risk-on party going. Aztrazeneca’s vaccine is now on its late-stage clinical trials, while McConnel might be cooking up another stimulus bill proposal.

If we see more risk-taking during the London session, then EUR/JPY could break above its low-key Cup and Handle pattern and head for the previous area of interest near 127.50.

If the eurozone’s PMIs print weaker than markets are expecting, however, then EUR/JPY could drop back down to its range and find support in the key 126.00 and 125.50 levels.