Euro at Risk for Further Declines Against Japanese Yen

Euro at Risk for Further Declines Against Japanese Yen

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The Japanese Yen could potentially renew strength against the Euro and British Pound, with the former showing clear difficulty in climbing above important resistance levels. Continued failure in the Euro/Japanese Yen would signal further declines are likely.

EURJPY

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The Euro/Japanese Yen pair continues to fail at key Fibonacci resistance, and medium-term momentum favors further EUR/JPY weakness. The 131.00 level represents the 61.8 percent Fibonacci retracement of the 141.80-113.60 decline, and a triple top at said level tells us that bears maintain control of the risk-sensitive pair. Short-term targets become recent spike-lows near 124.00, while a break above 131.00 would clearly negate our bearish bias.

GBPJPY

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The British Pound continues its breathtaking declines against the Japanese Yen, and the fact that the currency continues to teeter near record-lows gives us little reason to believe that it may see noteworthy rallies through the near term. 129.00 represents the trough set in 1995 before the GBP/JPY went on a multi-year recovery, but the sheer strength of the 2007-2008 downtrend gives us comparatively little confidence to expect similar price action ahead. As such, we remain medium to long-term bears, while short-term price action is substantially less clear.

CHFJPY

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The Swiss Franc has hit a clear roadblock against the Japanese Yen, failing at a multi-month falling trendline and key Fibonacci retracement level. Recent peaks near 87.00 coincide with the confluence of the August-December downtrend and the 50.0 percent Fibonacci retracement of the 98.70-74.60 move. Continued failure at said level leaves our bias firmly to the downside, and subsequent price targets become recent spike-lows near the 80.00 mark. A break above 86.70 would negate our bearish bias.

CADJPY

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The Canadian Dollar remains dangerously close to fresh multi-decade lows against the Japanese Yen, but recent price action suggests that the CAD/JPY is likely to remain in consolidation through short-term trading. The pair is currently stuck in sideways price action through illiquid year-end trade, and the absence of a break in either direction leaves our short-term bias effectively neutral. Suffice to say, however, overwhelmingly bearish momentum suggests risks remain to the downside.

AUDJPY

The Australian Dollar has recently broken out of its short-term wedge formation against the Japanese Yen, but extremely overbought oscillators suggests that a very short-term correction is likely. Next noteworthy resistance comes in at previous congestion near the 65.00 mark, while support can be found at the 62.50 mark. Our near-term bias remains bullish on a hold of the pair's short-term rising trendline near 60.00.

NZDJPY

The New Zealand Dollar trades near important resistance levels against the Japanese Yen, and short-term price action may dictate whether the NZD/JPY will continue its recent recovery. The 54.00 mark represents a makeshift double-top, and a failure here will keep the pair within its 47.80-54.00 range. Otherwise, a break higher would next target key Fibonacci resistance and previous spike-highs of 56.40.