Euro Technical Analysis: EUR/JPY

EUR/JPY

For those that are looking to take a bearish stance on the risk trade along with the Euro, EUR/JPY can remain of interest.

If we are, in fact, seeing a major disruption posed by Covid variants and a rise of Covid numbers, then logically we will see rates continuing to back down. If that happens, the allure of short-Yen carry trades is no longer as attractive, and as history has shown, that can lead to some pretty fast unwinding scenarios that bring on Yen-strength.

If the Euro remains weak to go along with that Yen-strength, this could make for an aggressive setup on the short-side of EUR/JPY.

The pair is currently working on a bearish engulfing candlestick for the month of November with less than two days left, and there’s a big price of support in-play at the moment around the current nine-month-lows.

A breakdown from that level opens the door for a push down towards 126.76, but this is a messy 118 pips as there’s been a number of wicks in this vicinity when prices were grinding higher around the New Year open.