EUR/JPY Forecast for the week of August 13, 2012, Technical Analysis

By FX Empire Analyst - Christopher Lewis
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EUR/JPY had a bearish week again as the downtrend continues. The Euro is in serious trouble against most currencies at the moment, and the Japanese yen will certainly be no different. As you can see on the chart, we have a downtrend line that the market has been following sense the end of spring, and it seems that we are more than willing to continue this pattern.

In a world where the "risk off" trade seems to be the norm now, this pair will continue to struggle as it is considered "risky" to buy it overall. The relative safety of the Japanese yen will continue to outshine the Euro and its major issues, and as long as the politicians in Europe decide to drag their heels, this pair will continue to fall.

It should be noted however, that the Bank of Japan is actively working against the value of the Yen. They don't worry so much about this pair, but rather against the value of the US dollar. We simply have to make sure if we are going to sell this pair that the USD/JPY pair isn't melting down. If it is, there is a high likelihood of Bank of Japan intervention in that market. This typically pushes all yen related pairs all as the Japanese yen gets sold off en masse.

As long as the US dollar can maintain at least some supportive action against the Japanese yen, this pair should continue to be an easy sell on the rallies situation. The reason support area of 95 will certainly be tested going forward, and we see as fully no reason why this market will continue to fall over time. Granted, there will always be rallies and hope seems to spring eternal for the Euro, but the reality is that even if the European situation gets fixed as far as the debts are concerned, there are a couple of years of recession ahead for the continent. With this in mind, we simply cannot find a situation where we want to buy this pair. Even if we do rally above the trend line, we see the 100 area as being too resistive for the buyers to take out. 

EUR/JPY Forecast for the week of August 13, 2012, Technical Analysis

EUR/JPY Forecast for the week of August 13, 2012, Technical Analysis

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