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Forex Market: EUR/JPY daily forecast

During yesterday’s trading session EUR/JPY traded within the range of 138.65-139.13 and closed at 138.97.

At 6:49 GMT today EUR/JPY was losing 0.11% for the day to trade at 138.77. The pair touched a daily low at 138.65 at 6:25 GMT, breaching the first key support.

Fundamental view

At 08:00 GMT, the Ifo Institute for Economic Research will publish its IFO Business Climate Index for Germany, the largest economy in the Euro zone. The index is expected to have slightly deteriorated to 110.9 this month, from 111.2 in April.

The index is based on a monthly survey among 7,000 respondents from companies in the manufacturing, construction, wholesale and retail sectors. Respondents give their assessments of the current business situation and their expectations for the next six months. They characterize their companies’ situation as “good”, ” satisfactory” or ” poor ” and their expectations for their business over the next six months as ” more favorable “, ” unchanged ” or ” more unfavorable ”. The balance value of the current business situation is the difference between the percentages of respondents that answered the situation is “good” and those that assess it is “bad”, while the value of the balance for future business expectations is the difference between the percentages of the responses ” more favorable ” and ” more unfavorable “.

Ifo business climate index represents the average balance of the two sub-indexes, the sub-index of current conditions and the sub-index of business expectations. The composite index uses a value of 100 points as a separator between the positive and negative forecasts. The more the result gets away from 100 points, the greater the confidence of the respondents.

A higher than expected reading will certainly provide support to the 18-nation common currency.

Technical view

Screenshot from 2014-05-23 09:48:19

According to Binary Tribune’s daily analysis, in case EUR/JPY manages to breach the first resistance level at 139.18, it will probably continue up to test 139.40. In case the second key resistance is broken, the pair will probably attempt to advance to 139.66.

If EUR/JPY manages to breach the first key support at 138.70, it will probably continue to slide and test 138.44. With this second key support broken, the movement to the downside will probably continue to 138.22.

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