On The Red Danube
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Here we are digging into the technicals for EURJPY as my models begin to start showing overbought levels; this is going to trigger a corrective pullback towards the key 118.xx handle which will act as support for the large swing up with European capital inflows.
On the Technicals a weekly close above the 121.382 highs will confirm a breakout; the natural flows here will run on towards 123.3x which is acting strong resistance. This breakout scenario will only come from a material improvement in risk-sentiment.
Whilst to the downside, 76.4% retracement of entire 2016 through 2018 rally pulled the handbrake in the decline. Support is now being raised and buying interest will be located at 120.0x followed by an important 118.0x which will serve as a pivot in the rally.
The Euro chart is starting to look very good:
On the Macro side, politics having much more impact than economics unfortunately. Growth remains sluggish, and in Europe close to stagnant. There is a notably variation in manufacturing (globally) and services, and crystal clear in the divergence with Germany and Italy vs France and Spain. Lagarde is going to start a new chapter for Europe, she will focus heavily on fiscal and unification in the Governing Council around the September package.
For the ECB Monetary perspective, I still think she may have to bend the knee once more with a 10bp cut in Q120. Compared with the fiscal side, which will include 0.4% easing of GDP in Germany. Both monetary and fiscal will help but it will unlikely trigger a meaningful rebound in my books and therefore Europe will likely remain more dependent on external flows than domestic regions. It will serve as a useful tool in the US slowdown and this is very bullish EUR by acting as a funding mechanism.
On the JPY side;
We are gridlock in USDJPY until BoJ comes back in focus later this month. I am expecting the BoJ to cut once more this month, and once cleared we will once again be at the mercy to risk gyrations. For this reason I remain bearish in the medium term with 106 and 102 targets to resume via a helping hand from some new risk-off news flows. To the top side, I think 110.2x looks like a very attractive level to engage in short exposure and fade the optimism rally.
This is largely a result of the USD devaluation; the EUR strength will outweigh the JPY strength in my books as we transition into the next economic cycle. For all those wanting to dig deeper into the JPY macro side with BOJ cuts coming, I would recommend seeing the archives. We can open the conversation for those trading the CB event live in the comments.
Jump in with your charts and ideas on EURJPY...Thanks!
On the Technicals a weekly close above the 121.382 highs will confirm a breakout; the natural flows here will run on towards 123.3x which is acting strong resistance. This breakout scenario will only come from a material improvement in risk-sentiment.
Whilst to the downside, 76.4% retracement of entire 2016 through 2018 rally pulled the handbrake in the decline. Support is now being raised and buying interest will be located at 120.0x followed by an important 118.0x which will serve as a pivot in the rally.
The Euro chart is starting to look very good:
On the Macro side, politics having much more impact than economics unfortunately. Growth remains sluggish, and in Europe close to stagnant. There is a notably variation in manufacturing (globally) and services, and crystal clear in the divergence with Germany and Italy vs France and Spain. Lagarde is going to start a new chapter for Europe, she will focus heavily on fiscal and unification in the Governing Council around the September package.
For the ECB Monetary perspective, I still think she may have to bend the knee once more with a 10bp cut in Q120. Compared with the fiscal side, which will include 0.4% easing of GDP in Germany. Both monetary and fiscal will help but it will unlikely trigger a meaningful rebound in my books and therefore Europe will likely remain more dependent on external flows than domestic regions. It will serve as a useful tool in the US slowdown and this is very bullish EUR by acting as a funding mechanism.
On the JPY side;
We are gridlock in USDJPY until BoJ comes back in focus later this month. I am expecting the BoJ to cut once more this month, and once cleared we will once again be at the mercy to risk gyrations. For this reason I remain bearish in the medium term with 106 and 102 targets to resume via a helping hand from some new risk-off news flows. To the top side, I think 110.2x looks like a very attractive level to engage in short exposure and fade the optimism rally.
This is largely a result of the USD devaluation; the EUR strength will outweigh the JPY strength in my books as we transition into the next economic cycle. For all those wanting to dig deeper into the JPY macro side with BOJ cuts coming, I would recommend seeing the archives. We can open the conversation for those trading the CB event live in the comments.
Jump in with your charts and ideas on EURJPY...Thanks!
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