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eur/jpy has a nice bullish ascending triangle formation on it as you point out. I cannot guess which way it will break, but as of now, it’s bullish till it starts breaking the yellow support areas and eventually the box.
There are some scenarios that could take place.
1. Break out. Same situation continues. Eur keeps rising even VS the yen as most of the dollar drop is weighted on the euro.
2. Break Down. USD keeps falling, but devaluation is focused more on dept in Asian countries. This would allow the yen to appreciate over the euro more in a dollar decline assuming the BOJ does not intervene against the dollar to the point it breaks it technically.
3. Break down. USD turns around and the euro pulls back. Eur/jpy could be limited to the down side if the BOJ is doing intervention during the process of a dollar bounce. That will most likely not be the case since the euro is taking the hardest hit in this dollar decline so far. If the dollar bounced we would see selling weighted towards the euro.
One thing to look at. Keep an eye on the gbp/jpy. It’s not as bullish as the eur/jpy and it highlights the weighted effect the USD is having on the euro vs other currencies. I would not be surprised to see the eur/jpy follow it if traders weigh the Asian currencies on the dollar decline more so than the euro in the future.
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