July 2, 2022
  • July 2, 2022

Euro technical analysis: EUR / USD, EUR / JPY

By on November 29, 2021 0

Talking Points on Euro, EUR / USD, EUR / JPY:

  • The euro has been in an aggressive bearish state for the past two months, accelerated by recent concerns over Covid and the potential for more lockdowns and protests against those lockdowns across the continent.
  • EUR / USD is testing a major support point, but if risk-free trading envelops the markets, EUR / JPY may actually be more attractive on the short side.
  • The analysis contained in the article is based on Price action and graphic training. To learn more about price action or chart patterns, check out our DailyFX Education section.

Europe continues to fight Covid and although the pandemic remains a global concern, the fragile state of the European economy makes it a potentially disastrous scenario for the European continent. And while the Fed and the BoC and even the RBNZ have supported higher rate protocols, or at least the idea of ​​them, the ECB has remained loose and passive throughout the European recovery lagging behind its trade counterparts.

The euro has been difficult to sell against the US dollar since its peak in May. This peak developed around 14.4% Fibonacci retracement of the 2017-18 major move, and the 61.8% marker from that same study is what happened last week to help hold the low. This plots around 1.1187 and synchronizes with another Fibonacci retracement, the 61.8% “lifetime move” marker in the pair, which resides at 1.1212.

This area was last in play a year ago, holding lower support after the rally started and this came after the same area held up as resistance in late 2019 trading.

The question now is to know if this spot can be enough as support or if it is a simple speed bump on the decline of the EUR / USD train.

EUR / USD weekly price table

Graphic prepared by James stanley; EURUSD on Tradingview


For those looking to take a bearish position on risky trade with the Euro, the EUR / JPY may remain interesting.

If we are in fact seeing a major disruption posed by the Covid variants and an increase in the number of Covids, then logically we will see the rates continue to drop. If this happens, the allure of short carry trades on the Yen is no longer as attractive and, as history has shown, it can lead to fairly quick unwinding scenarios that strengthen the Yen.

If the Euro remains weak to accompany this strength of the Yen, it could lead to an aggressive setup on the short side of the EUR / JPY.

The couple are currently working on a bearish engulfing candlestick for the month of November with less than two days left, and there is a big support price in play right now around the current nine month lows.

A breakout from this level opens the door for a drop to 126.76, but this is a 118 pip mess as there were a number of wicks in this neighborhood as prices rose towards the opening of the new year.

EUR / JPY weekly price table

eurjpy weekly price table

Graphic prepared by James stanley; EURJPY on Tradingview

— Written by James stanley, Senior strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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