Key Points
- The Euro recovered very well against the Japanese Yen and posted good weekly gains.
- However, the EURJPY pair is facing a major hurdle on the upside in the form of a bearish trend line on the daily chart.
- The German Services PMI was released by the Markit Economics today during the London session.
- The result was positive, as the preliminary reading posted a rise from 53.7 to 54.6 in July 2016.
Technical Analysis
The Euro after trading as low as 109.50 versus the Japanese yen surged higher and gained more than 400 pips. However, the upside may close to an end, as there is a major hurdle on the upside in the form of a bearish trend line on the daily chart.
The pair is also trading around the 21 hourly simple moving average, which is acting as a resistance along with the 61.8% Fib retracement level of the last drop from the 124.19 high.
On the downside, the 116.50 level can be seen as a major support.
German Services PMI
Today in the Euro Zone, the German Services PMI, which interviews German executives on the status of sales, employment, and their outlook was released by the Markit Economics.
The market was lined up for a decline from the last reading of 53.7 to 53.2 in July 2016. However, the result was positive, as the preliminary reading posted a rise from 53.7 to 54.6. The report highlighted that “Output growth in Germany’s private sector accelerated at the start of the third quarter, as highlighted by the Markit Flash Germany Composite Output Index rising from June’s 54.4 to 55.3. The index reached its highest level in 2016 so far with both manufacturers and service providers reporting stronger expansions”
Overall, the report was encouraging, but we cannot discard the fact that the pair will find it difficult to break the highlighted resistance area.
Overall, the report was positive, and may help the US Dollar to gain traction in the short term.
