2) EURJPY

Technical Analysis (MA, RSI, STOCH, MACD, ADX)

• M30 - DOWN
• H1 - RANGE
• H4 - RANGE
• D1 - DOWN
• W1 - DOWN
• MN - DOWN

• Resistance: 130.50, 130.65, 131.30
• Support: 128.50, 128.00, 127.25

Yesterday the currency pair was very active, the main movement was downward. The downside movement was supported by the general demand for safe-haven currency, as well as slight macroeconomic pressure on the EUR. As a result, for yesterday's trading day, the market is still in the Risk-OFF phase, but there is a slight dynamics towards an increase in the value of the Fear-Greed indicator, now the value is 27.

Safe-house currencies performed best in trading yesterday, with markets struggling with rising energy prices, persistent inflationary pressures, supply-side constraints and the prospect of tightening monetary policy. The EUR was weighed down by gloomy German factory orders, which fell more-than-expected and fell -7.7% in August from + 4.9% in July. Also, the volume of retail sales (MoM) in August was worse than forecast and amounted to 0.3%. The data indicate that the economic recovery in Europe has lost momentum, or at least in Germany it is difficult.
European governments are increasingly concerned that rapidly rising energy prices could jeopardize an already fragile recovery.
The European Commission plans to outline measures for national governments next week, including compensation for the most vulnerable households, tax cuts and government aid to companies.

However, closer to the North American session, risk sentiment changed after the Russian leader assured Europe of additional gas supplies. In addition, the main Republican in the US Senate, Mitch McConnell, said that his party would allow the federal debt ceiling to be extended until December to prevent a default on federal debt.

Demand for the Japanese yen eased further today after BoJ downgraded its economic valuation in five of the country's nine regions, saying their recovery has stalled due to renewed Covid-19 cases. Production cuts due to supply shortages have also affected these areas, according to the Bank of Japan's quarterly regional economic report released today. All this led to a moderate growth, but in any case, the main risks are still present, so in the short term the currency pair may still collapse.

As previously written, the market is likely to be subject to sharp impulses in demand for protection this week. Trading is likely to be more sideways, as there is no macro data for the EU or Japan ahead that could set a clear direction for the currency pair's movement. Ahead, the macroeconomic calendars of the EU and Japan remain empty. The only thing that can be paid attention to is the publication of the minutes of the ECB meeting on monetary policy today.

In addition to the listed risks, do not forget that the US labor market can arrange serious turbulence. Labor market data releases tomorrow are definitely the key ones this week.

Short-term forecasts for the currency pair are reduced to control over the market phase; if there is an impulse to reject risks, the currency pair will fall down. There are enough risks in the market. However, with the situation normalizing, the fundamental assessment speaks of an exclusively upward movement, which is supported by macroeconomic data from the EU and Japan, as well as the success of the EU in recovering from COVID by years ahead of Japan. Plus the position of BoJ, which was recognized as a currency manipulator.

In other words, the downward movement is supported only by risk aversion. In any case, the support level of 128.00 is still a reversal level.

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