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EURJPY – Topping Out?
EUR/JPY has enjoyed a fews days of rebound post the Brexit shock, but the risk sensitive currency cross may be reaching the top of its bounce. Tonight the market will get both the Tankan survey and the Chinese manufacturing PMI data which are likely to show further deterioration. In fact if the Chinese PMI prints below the key 50 boom/bust line for the first time in months its sure to trigger a drop in the pair as risk aversion flows would return.
But the yen part of the cross is not the only problem. The euro has been under selling pressure as well after reports that ECB may have to lower its credit standards for QE after the Brexit referendum as it simply does not have enough higher ranked credit to choose from. EUR/USD could slip to below 1.1000 if Asia session triggers further sell off in risk.
Technically EUR/JPY sees resistance at the 116.00 figure and support at 112.00 but it may run out of gas well ahead of those levels.