The eurozone PMIs are coming up while EUR/JPY is hanging out right at the bottom of its short-term range.
Will we see a bounce or a break lower?
Before I show y’all this potential trade opportunity, take a look at the top market themes in the last couple of hours:
- U.S. officials hint at progress in securing stimulus deal soon
- Empire State manufacturing index down from 6.3 to 4.9
- U.S. import prices post 0.1% uptick vs. projected 0.3% gain
- U.S. industrial production up 0.4% vs. 0.3% forecast
- API reported another build in crude oil stockpiles
- New Zealand GDT auction yielded 1.3% gain in dairy prices
- BOJ to use $6 billion in gov’t cash to combat pandemic impact
- Australian flash manufacturing PMI up from 55.8 to 56.0
- Australian flash services PMI up from 55.1 to 57.4
- Japanese flash manufacturing PMI up from 49.0 to 49.7
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. headline and core CPI at 8:00 am GMT
- French flash PMIs at 9:15 am GMT
- German flash PMIs at 9:30 am GMT
- Eurozone flash PMIs at 10:00 am GMT
- U.K. flash PMIs at 10:30 am GMT
What to Watch: EUR/JPY
This pair has been pacing back and forth in between support at the 125.85 mark and resistance around 126.60. Price is testing the bottom of the range and might be due for a bounce.If so, EUR/JPY could climb to the range resistance again, especially since Stochastic is suggesting that sellers could use a break.
On the other hand, a break below support could set off a slide that’s at least the same height as the rectangle pattern.
It could all come down to the upcoming batch of PMI readings from the eurozone’s top economies, as these leading indicators provide a pretty reliable preview of performance.
Analysts are expecting mixed results, though, with France likely posting some improvements in both manufacturing and services sectors. Germany could show slight declines, possibly weighing on the region’s overall readings.
Stronger than expected figures could spur a bounce to the top of the range while downbeat readings might lead to a break lower. Just make sure that you check out the average EUR/JPY volatility if you’re planning on trading the news with this pair!