Forex Market: EUR/JPY daily forecast

During yesterday’s trading session EUR/JPY traded within the range of 136.84-137.85 and closed at 137.76.

At 7:24 GMT today EUR/JPY was adding 0.01% for the day to trade at 137.74. The pair touched a daily high at 137.78 at 00:45 GMT.

Fundamental view

The number of jobless people in Germany, the largest Euro zone economy, probably decreased by 5 000 in July, according to the median estimate by experts, after the number of unemployed Germans unexpectedly climbed by 9 000 in in June. A greater than projected drop would have a bullish effect on the single currency. In addition, the unemployment rate in the country probably remained unchanged at 6.7% in July. Lower-than-expected reading would have a bullish effect on the euro. The Federal Statistical Office is expected to release the official rate at 7:55 GMT.

The jobless rate in the Euro zone as a whole probably remained steady at 11.6% in June. The official rate is due to be released at 9:00 GMT by Eurostat. Lower than expected unemployment rate would be supportive for the euro.

At the same time, the annualized preliminary Harmonized Index of Consumer Prices (HICP) in the Euro zone, probably remained unchanged at 0.5% in July (matching the weakest reading since October 2009), according to the median forecast by experts. In June the annualized final HICP also stood at 0.5%, just quarter of the ECB target of just under 2%. The index shows the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. The HICP is used to evaluate and compare inflation rates between Member States, according to Art. 121 of the Amsterdam’s Agreement and directives by the European Central Bank (ECB), in order to achieve price stability and the implementation of monetary policy. In case the HICP increases, thus, approaching the 2% inflation objective set by the ECB, this would support demand for the euro. Eurostat is scheduled to release the official data at 9:00 GMT.

In addition, the annualized preliminary consumer price index in Italy probably remained steady at 0.3% in July. Nation’s annualized preliminary CPI for the same month, evaluated in accordance with the harmonized methodology, probably matched the final HICP estimate of 0.2% in June, which was reported on July 15th. The National Institute of Statistics is to release the official CPI report at 9:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 137.48. In case EUR/JPY manages to breach the first resistance level at 138.13, it will probably continue up to test 138.49. In case the second key resistance is broken, the pair will probably attempt to advance to 139.14.

If EUR/JPY manages to breach the first key support at 137.12, it will probably continue to slide and test 136.47. With this second key support broken, the movement to the downside will probably continue to 136.11.

In weekly terms, the central pivot point is at 136.82. The three key resistance levels are as follows: R1 – 137.27, R2 – 137.79, R3 – 138.24. The three key support levels are: S1 – 136.30, S2 – 135.85, S3 – 135.33.