In the periods of instability on the financial markets the Japanese Yen acts as a safe-haven currency. However, since mid-May the Yen has been declining in the pairs with the USD and Euro.
Today, research institute Ifo has raised the forecast of economic growth of Germany, one of the largest economies of Eurozone. It is expected now, that in 2015 German GDP will grow by 1.9% against the previous forecast of 1.5%. In 2016 inflation in Germany will rise up to 1.6% against 0.8% as projected earlier this year. In Japan consumer price inflation is near the zero level, while the target set by the Bank of Japan is 2.0%. It is expected that at the next meeting of the Bank of Japan on 18-19 June, the Japanese regulator will leave monetary policy unchanged.
The movement in the pair EUR/JPY is also affected by the difference in the interest rates of Eurozone and Japan. Although the Central Banks of both countries adhere to the soft policy the Euro seems stronger despite the pressure caused by the unresolved Greek problem and possibility of default in Greece.
Note also that following the announcement of the outcome of the US fed meeting today, and a speech by Janet Yellen, volatility in the market will increase, which will also affect the pair EUR/JPY.
Support and resistance
The pair EUR/JPY is steadily moving in the upward channel. After the decline in price from 149.50 to 127.00, the pair is moving up. It has already exceeded the level of 138.10 (Fibonacci 50%) and is going to 140.75 (Fibonacci 61.8%).
On the daily chart OsMA is in the sell zone, while Stochastic has reversed, giving a buy signal. On the four-hour chart both, OsMA and Стохастик give buy signals. The pair EUR/JPY is near support levels. On the four-hour chart support levels are 138.70 (ЕМА50) and 138.10 (Fibonacci 50%). The pair has reached the level of 140.75 (Fibonacci 61.8%). If the price continues to rise, the pair can exceed this level and go p to the highs of the year at the level of 149.50.
Support levels: 138.70, 138.10, 137.00 and 135.50.
Resistance levels: 140.00, 140.55 and 140.75.
It is recommended to open long positions at the current price and from the levels of 139.00, 138.70, 138.10, 137.00 and 136.80 with the targets of 140.75 and 142.00. Sell positions can be opened after breakdown of the level of 135.50 (Fibonacci 38.2%) with the targets of 133.45 and 132.25.