Fundamental Analysis of EUR/JPY for December 18, 2018

EUR/JPY has been corrective itself inside the range between 127.50 to 130.00 area for a few weeks now which is expected to lead to certain bearish pressure in the coming days. Despite downbeat GDP data from Japan, JPY has recently managed to gain certain momentum over EUR which indicates weakness of EUR.

Earlier EUR has been hurt by Italy's Budget Deficit issue. Recently France has also reviewed to have 3.4% deficit in 2019 which exceeds the limit of 3.0% of European Union's level of deficit. The latest economic reports from the eurozone also revealed tepid readings, leading the currency to lose momentum against JPY. Today German Ifo Business Climate report is going to be published which is expected to have a slight decrease to 101.8 from the previous figure of 102.0. Moreover, the eurozone's economy is showing lackluster performance due to uncertainty about the BREXIT deal.

On the other hand, ahead of BoJ policy meeting this week, JPY is likely to assert its strength. JPY can also find support if the reports are better than expected. Recently Japan's government revised downward its forecast for economic growth and consumer inflation for the current and next fiscal year as weakening export demand and natural disasters weighed down on the economy. Japan's economy is expected to grow to 0.9% in Fiscal year of 2018 which was expected to be at 1.5% earlier. Ahead of BOJ Policy Rate report to be published with an unchanged value of -0.10% and All Industry Activity to increase to 2.0% from the previous negative value of -0.9%. Tomorrow Japan's Trade Balance report is going to be published which is expected to decrease to -0.31T from the previous value of -0.30T.

Meantime, JPY has been quite mixed amid the economic reports whereas EUR is losing ground. Until the eurozone comes up with better than expected results, JPY is expected to hold the upper hand over EUR in the coming days.

Now let us look at the technical view. The price was pushed below off the Kumo Cloud recently which lead to impulsive and consistent bearish pressure, leading the price towards 127.50 support area. The dynamic levels like 20 EMA, Tenkan and Kijun line is currently above the price which is expected to act as dynamic resistance for further bearish momentum in the future. A daily close below 127.50 is expected to lead the price impulsively lower towards 125.50 in the coming days. As the price remains below 130.00 area, the bearish bias is expected to continue in the future.

SUPPORT: 125.50, 127.50

RESISTANCE: 128.50, 130.00

BIAS: BEARISH

MOMENTUM: VOLATILE and CORRECTIVE

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