Since the beginning of decline in December 2014 the pair EUR/JPY has lost over 2300 points, reaching the level of 126.30. This April, the pair was undergoing upward correction, and stopped at the level of 135.50, which coincides with Fibonacci retracement of 38.2%, and with the line of ЕМА200. These are the most important resistance levels for the pair.
If the pair exceeds these levels, the price can rise to 136.50, 137.20 or 138.10. If downward movement resumes, the pair can reach the level of 132.20 (Fibonacci retracement of 23.6%), 131.10 and 130.10 or probably, 127.00.
In many ways, movement in the pair will depend on the decisions of the Central banks of Japan and EU, as well as on the U.S. news. It is not expected that tightening of the monetary policy will take place in Japan or in the EU countries in the near future. However, US news, especially the US Fed decision on the interest rate can affect price movement on the pair EUR/JPY, and on the market in general.
Today, attention should be focused on the US retail sales data for April. In case the data is negative, it will mean that the American economy is too weak in order to increase interest rates at the next meeting of the Federal Reserve in June. In this case the USD will weaken against European currency, which, in its turn, will have a positive impact on the pair EUR/JPY.
Support and resistance
On the hourly chart OsMA histogram is declining, trying to reach zero level. If it goes to the negative zone, sell positions will be advisable. Stochastic gives a sell signal; however the pair is in the upward channel and above the rising lines of ЕМА144 and ЕМА200.
On the daily charts Н1 and Н4, trend indicator also demonstrates long positions. On the daily chart OsMA histogram is declining, trying to reach zero level. If it comes to the negative zone, it makes sense to open sell positions. Stochastic is in the sell zone. The pair is below the lines of ЕМА144 and ЕМА200.
Resistance levels: 134.80, 135.50, 135.70, 136.50 and 137.20.
Support levels: 134.00, 133.60 and 132.20.
It makes sense to buy the pair if the price breaks down the level of 135.20. The targets of long positions are 135.50, 135.70 and 136.50. If the price drops below the level of 134.00 sell the pair with the targets of 133.60 and 132.20.