For several weeks EUR/JPY has been trading in a sideways channel close to the local maximum of 141.15. At the beginning of last week the pair consolidated amid positive data on PMI in Germany, France and the Eurozone as a whole. But since Wednesday, the single currency is losing its positions after the publication of macroeconomic statistics.
The main driving force is the situation in Greece. Since Monday, European Commission and Greek officials have been trying to strike a deal. Last Saturday’s negotiations should have got everything straightened out but no agreement was achieved. Greece does not receive another tranche without implementing harsh austerity measures.
The Euro reaction was very negative. Trading week opened with a significant gap of more than 400 points. It is worth mentioning that the pair won back more than a half of its decline.
Now the pair is trading at the level of 136.10. This week Consumer Price Index, Unemployment Rate and Retail Sales Index of Germany and the whole Eurozone influence the pair. Moreover, Construction PMI in Japan and ECB Monetary Policy report should be considered.
Support and resistance
This week the pair should decline to the recent minimum of 133.90 due to the falling demand for the Euro.
As an alternative, the pair may consolidate within a narrow channel of 135.60-134.50, and after the decision on the Greek issue the volatility may increase. All major technical indicators confirm further downward trend.
Support levels: 136.10, 135.60, 135.00, 134.50, 133.90, 133.10, 132.40.
Resistance Levels: 137.00, 137.70, 138.15, 138.60, 139.00, 139.50, 140.50, 141.15.
Given the situation, open short positions with targets at 133.90, 133.10 in the medterm, and 127.00, 126.15 in the long term.