The Japanese Yen is reacting with bearish momentum against the EUR as investors seek its safe haven status. As global equity markets suffer from nervous sentiment and steep declines the EUR/JPY has displayed a solid amount of selling. Support levels have been proven vulnerable and trading within the forex pair has been fast. Speculators will need to be braced for volatility today and tomorrow. They will also have to tolerate the possibility that news events could roil sentiment over the weekend and cause swift reactions early on Monday.
The EUR/JPY is testing support levels experienced in late September, but the forex pair is on the threshold of sustaining bearish momentum and diving into support levels witnessed early June. Yes the EUR/JPY did trade within its current price vicinity in July too, but it experienced this price range as bullish sentiment was developing and risk appetite was increasing. The current move by the EUR/JPY may be mirroring early June trading more which occurred in a bearish investment landscape.
The cautious approach in forex is taking place as the US elections approach and its unknown results make investors nervous, particularly in Asia where the current White House administration has been pro-active economically and politically. Investors like certainty and the potential for surprise outcomes early next week from the US have financial institutions uneasy. Particularly because the US vote will impact Asia significantly.
The EUR/JPY is trading near the 122.600 mark early and it ability to sustain values near support levels which are important should keep speculators on their toes. Asian markets have reacted to the selloff from US equity indices with declines of their own. While US futures are indicating the possibility exist for a sudden burst of positive trading today, investors will likely remain wary and take a wait and see approach near term.
Yes the EUR/JPY has enjoyed a solid bullish trend since early May, but since late August when the forex pair enjoyed highs near 126.500 it has seen bearish momentum develop. While optimism is likely to been seen mid-term again for the EUR/JPY, speculators should anticipate choppy conditions in the coming days and the potential for further selling pressure to build. Support near 122.250 could prove significant and if it is punctured lower on sustained negative risk adverse movement the EUR/JPY could test values lower quickly.
EUR/JPY Short Term Outlook:
Current Resistance: 122.850
Current Support: 122.250
High Target: 123.100
Low Target: 121.750
