September 26, 2022

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EURJPY trades back in a channel area after a break higher failed on the hourly chart

7 min read

EURJPY trades between the channel trend lines

The EURJPY
EUR/JPY

The EUR/JPY is the currency pair encompassing the European Union’s single currency, the euro (symbol EUR, code EUR), and the Japanese yen of Japan (symbol ?, code JPY). The pair’s rate indicates how many Japanese yen are needed in order to purchase one euro. For example, when the EUR/JPY is trading at 125.00, it means 1 euro is equivalent to 125 Japanese yen. The euro (EUR) is the world’s second most traded currency, whilst the Japanese yen (JPY) is the world’s third most traded currency, resulting in an extremely liquid pair. Why the EUR/JPY Remains an Attractive Option for TradersWhilst the spreads of currency pairs vary from broker to broker, generally speaking the EUR/JPY often stays within the 1 pip to 3 pip spread range. The EUR/JPY is one of a select few pairs which have a low spread yet decent daily range. Important news announcements for this pair include the Consumer Price Index (CPI) for the Eurozone. Releases such as these give an idea of changes in the price of goods and services, and the Jobless Rate for Japan, which measures the percentage of unemployed in the country.For example, if this figure comes out as a lower percentage, it indicates strength in the Japanese economy, thereby pushing the EUR/JPY lower. Out of all the JPY pairs, it is the EUR/JPY that is arguably the most attractive to the broad spectrum of traders, regardless of their method of trading. Its low spread plus high volatility makes it a great candidate for both short- and long-term trading. Compared to the USD/JPY, it has a higher spread but higher range, whereas compared to the GBP/JPY, it has a lower spread but also a lower range. In this sense the EUR/JPY combines the best of both worlds, which explains part of its appeal

The EUR/JPY is the currency pair encompassing the European Union’s single currency, the euro (symbol EUR, code EUR), and the Japanese yen of Japan (symbol ?, code JPY). The pair’s rate indicates how many Japanese yen are needed in order to purchase one euro. For example, when the EUR/JPY is trading at 125.00, it means 1 euro is equivalent to 125 Japanese yen. The euro (EUR) is the world’s second most traded currency, whilst the Japanese yen (JPY) is the world’s third most traded currency, resulting in an extremely liquid pair. Why the EUR/JPY Remains an Attractive Option for TradersWhilst the spreads of currency pairs vary from broker to broker, generally speaking the EUR/JPY often stays within the 1 pip to 3 pip spread range. The EUR/JPY is one of a select few pairs which have a low spread yet decent daily range. Important news announcements for this pair include the Consumer Price Index (CPI) for the Eurozone. Releases such as these give an idea of changes in the price of goods and services, and the Jobless Rate for Japan, which measures the percentage of unemployed in the country.For example, if this figure comes out as a lower percentage, it indicates strength in the Japanese economy, thereby pushing the EUR/JPY lower. Out of all the JPY pairs, it is the EUR/JPY that is arguably the most attractive to the broad spectrum of traders, regardless of their method of trading. Its low spread plus high volatility makes it a great candidate for both short- and long-term trading. Compared to the USD/JPY, it has a higher spread but higher range, whereas compared to the GBP/JPY, it has a lower spread but also a lower range. In this sense the EUR/JPY combines the best of both worlds, which explains part of its appeal
Read this Term – which has been on an upward trajectory with the JPY
JPY

The Japanese yen (JPY) is the official currency of Japan and at the time of writing is the third most-traded currency in the world behind only the US dollar and euro.The JPY is used extensively as a reserve currency and is relied upon by forex traders as a safe haven currency.Originally implemented in 1871, the JPY has had a long history and has survived multiple world wars and other events. This was followed by the creation of the Bank of Japan (BoJ) in 1882 and the full oversight of the JPY by the Japanese government only in 1971.Japan has historically maintained a policy of currency intervention, continuing to this day. The BoJ also adheres to a policy of zero to near-zero interest rates and the Japanese government has previously had a strict anti-inflation policyWhat Factors Affect the JPY?The aforementioned role of the BoJ has dramatically shaped the JPY in forex markets. Any further changes in monetary policy by the central bank are closely watched by forex traders.Additionally, the Overnight Call Rate is the key short-term inter-bank rate. The BoJ utilizes the call rate to signal monetary policy changes, which in turn impact the JPY.The BoJ also purchases both 10- and 20-year Japanese government bonds (JGBs) on a monthly basis in order to inject liquidity into the monetary system. The consequent yield on the benchmark 10-year JGBs helps serve as a key indicator of long-term interest rates.Economic data is also very important to the JPY. The most important of these releases in Japan are gross domestic product (GDP), the Tankan survey (quarterly business sentiment and expectations survey), international trade, readings of unemployment, industrial production, and money supply (M2+CDs).

The Japanese yen (JPY) is the official currency of Japan and at the time of writing is the third most-traded currency in the world behind only the US dollar and euro.The JPY is used extensively as a reserve currency and is relied upon by forex traders as a safe haven currency.Originally implemented in 1871, the JPY has had a long history and has survived multiple world wars and other events. This was followed by the creation of the Bank of Japan (BoJ) in 1882 and the full oversight of the JPY by the Japanese government only in 1971.Japan has historically maintained a policy of currency intervention, continuing to this day. The BoJ also adheres to a policy of zero to near-zero interest rates and the Japanese government has previously had a strict anti-inflation policyWhat Factors Affect the JPY?The aforementioned role of the BoJ has dramatically shaped the JPY in forex markets. Any further changes in monetary policy by the central bank are closely watched by forex traders.Additionally, the Overnight Call Rate is the key short-term inter-bank rate. The BoJ utilizes the call rate to signal monetary policy changes, which in turn impact the JPY.The BoJ also purchases both 10- and 20-year Japanese government bonds (JGBs) on a monthly basis in order to inject liquidity into the monetary system. The consequent yield on the benchmark 10-year JGBs helps serve as a key indicator of long-term interest rates.Economic data is also very important to the JPY. The most important of these releases in Japan are gross domestic product (GDP), the Tankan survey (quarterly business sentiment and expectations survey), international trade, readings of unemployment, industrial production, and money supply (M2+CDs).
Read this Term weakness – has seen a corrective move to the downside today.

Looking at the hourly chart, the acceleration higher in this pair increased yesterday on the break of a topside channel trendline. That break sent the price up to a high of 144.245 (highest level since January 2015.

However, momentum died in the New York session yesterday, and sideways price action into the Asian session allowed for the upward sloping topside trend line to catch up to the price. When the pair fell back into the channel, buyers turned to sellers and pushed the price down into the ECB meeting the decision.

Since then, there was a another move the upside. This time, the price held against the topside trend line near 144.08. The price has rotated back lower toward the lower channel trendline, and found early buyers against that extreme.

The lower channel trendline currently comes in at 142.57. The upper channel trendline cuts across at 144.09. The current price is trading at 143.20 between those 2 extremes.

Traders will be looking for those trendlines to provide support and resistance going forward with a break of either extreme likely triggering momentum in the direction of the break.

On the downside, falling below the lower trendline would have traders targeting the rising 100 hour moving average at 141.852. A move below the 100 hour moving average would be the 1st since May 27.

Conversely, a move to the upside -and above the upper channel extreme – and the high price from yesterday, will open the door for further upside momentum. Traders would use the trendline as support. As long as the price can remain above, the buyers remain in more control.

Overall, the buyers still hold the better hand. However, if the upper extreme can continue to find sellers and the lower trend line is broken, that would shift the shorter-term bias in the direction of the sellers. Until then however, the sellers still need to prove that they can take back control after the recent sharp move to the upside.

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