eurjpy another potential downleg as japan retail sales looms 2689782017
Since our last analysis dated on 17 March 2017, the EUR/JPY had declined as expected and hit the short-term downside target of 120.00. Click here […]
Since our last analysis dated on 17 March 2017, the EUR/JPY had declined as expected and hit the short-term downside target of 120.00. Click here […]
Since our last analysis dated on 17 March 2017, the EUR/JPY had declined as expected and hit the short-term downside target of 120.00. Click here for a recap on our previous report.
Later today at 2350 GMT (Wed, 29 Mar at 750 a.m. SG time), Japan will release its February 2017 retail sales figure where average consensus is pegged at 0.5% y/y versus 1% y/y seen in January 2017.
Japan retail sales had notched three consecutive months of positive y/y growth since November 2016 in line with consumer confidence which had recorded an upbeat figure of 43.1 in February 2017. Even though, it slipped slightly below from 43.2 recorded in January 2017 and below consensus of 43.7, it was still the highest figure seen since 12 months ago in January 2016.
Bank of Japan’s latest “Consumption Activity Index” had also shown a remarkable improvement as it rose by 1.1% m/m in January 2017 after two consecutive months of decline in November and December 2016. Therefore, it seems that consumer spending has started to turn around after stagnation in Q4 2016. If February’s retail sales continue to show positive growth, it is likely to translate to lower expectations on further monetary easing measures which can further reinforce the current JPY strength in the short-term.
In addition, global equities continue to remain fragile in the short to medium-term (1 to 3 weeks) where the S&P 500 is still showing further potential downside below its 2373/76 medium-term pivotal resistance zone as the positive effects from Trumponomics fade away. Thus, the JPY may see further upside (risk off effect) which can translate into further potential downside pressure in EUR/JPY.
Now, let’s take a look at its latest technical elements
Intermediate resistance: 120.39
Pivot (key resistance): 120.75
Supports: 119.55, 119.10/118.90 & 118.30/19
Next resistance: 121.70
As long as the 120.75 short-term pivotal resistance is not surpassed, the EUR/JPY is likely to see the start of another potential downleg to retest its intermediate support at 119.55 before targeting 119.10/118.90 with a maximum limit set at 118.30/19 (the lower boundary of the medium-term ascending channel in place since 24 June 2016 low).
However, a break above 120.75 may negate the preferred bearish tone to open up scope for a further corrective up move towards the next resistance at 121.70 (minor swing high area of 21 March 2017 & close to 61.8% Fibonacci retracement of the down move from 13 March 2017 high to 23 March 2017 low.
Charts are from eSignal
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