Fundamental Analysis of EUR/JPY for November 7, 2018

EUR/JPY has been quite impulsive and non-volatile with recent bullish gains which led the price to reside above 130.00 area currently. Amid lackluster economic reports from Japan, EUR gained momentum despite mixed economic data as well.

EUR has been struggling amid the Italian crisis of the Budget Deficit which is currently being tackled, but things are still quite unsettled. The European Commission could impose sanctions on Italy as the last resort if they don't agree on Rome's rule breaking budget. Last month, the European Commission rejected off Italy's budget because it breaches European Union Fiscal Rules which might result in a huge pile of public debt for the country. The European Union may come to certain strict decisions very soon on this issue. Today German Industrial Production report was published with an increase to 0.2% from the previous value of 0.1% which was expected to decrease to 0.0%, Italian Retail Sales decreased significantly to -0.8% from the previous value of 0.6% which was expected to be at -0.1% and the eurozone's Retail Sales also decreased to 0.0% from the previous value of 0.3% which was expected to be at 0.1%.

On the JPY side, the economy has been quite impressive with the development earlier, which is currently overshadowed by problems of financial institutions operation. At present, Japan can hike its interest rate in the coming months which is being considered as necessary to keep the economy stable by Bank of Japan's board member Yukitoshi Funo. BOJ is currently taking measures on the yields because higher yields may hurt the financial institutions by cooling the economy and development pace. Today Average Cash Earnings report was published with an increase to 1.1% from the previous value of 0.8% but it failed to meet the expectation of 1.2% which led to a bearish response from the market, resulting in JPY losing grounds. Additionally, the leading Indicators report was published with a decrease to 103.9% as expected from the previous value of 104.5%.

Meanwhile, despite the Italian Budget issue EUR is currently quite stronger fundamentally than JPY. On the other hand, BOJ is slow with the decision that leads to the bearish response from the market. Until Japan comes up with a positive report in the coming days, EUR is expected to dominate further in the coming days.

Now let us look at the technical view. The price has been quite impulsive with bullish gains recently which made the price break above 129.50-130.00 area with strong momentum. After forming Bullish Divergence in the process, the price is expected to continue pushing higher towards 132.00 area in the coming days. As the price remains above 128.50 area with a daily close, the bullish bias is expected to continue.

SUPPORT: 128.50, 129.50

RESISTANCE: 131.00, 132.00

BIAS: BULLISH

MOMENTUM: IMPULSIVE and NON-VOLATILE

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The material has been provided by InstaForex Company - www.instaforex.com