Technical Bias: Bearish
- Euro dived recently against a basket of currencies, including the US Dollar and the Japanese Yen.
- EURJPY traded lower and settled below a major support area (135.60-40).
- Japanese Services Purchasing Managers Index (PMI) released by Markit Economics came in at 51.2 in July 2015, down from the last reading of 51.8.
- Euro Zone Services Purchasing Managers Index (PMI) is a major release lined up today during the London session.
The Euro was crushed against the Japanese Yen recently, as sellers managed to take the EURJPY pair below a monster support area of 135.50. There was a sharp downside reaction noted after the break, as sellers gained control. The pair traded as low as 135.02 where buyers appeared.
The pair is currently making an attempt to correct higher, but it might face resistance around the 38.2% Fib retracement level of the last drop from 136.17 high to 135.02 low, which is positioned with the 135.50 area. There is also a bearish trend line on the hourly chart, waiting to act as a barrier for buyers on the upside.
If the pair moves lower from here, then the last swing low of 135.02 could be tested. A break below might take EURJPY towards 134.60.
Japanese Services PMI
Earlier today, the Japanese Services Purchasing Managers Index (PMI), which captures business conditions in the services sector was released by Markit Economics. The outcome was disappointing, as the Japanese Services PMI declined to 51.2 from 51.8 in July 2015. However, the report highlighted that there was a further improvement in business conditions in the Japanese service sector.
Commenting on the report, an economist at Markit, Amy Brownbill, mentioned that “Activity at Japanese services expanded for the fourth straight month in July, underpinned by a further expansion in new orders. In fact, growth in new business accelerated to a 26-month high”.
Selling rallies near the 135.50 resistance area is a good option.