Key Points
- The Euro today faced a lot of sellers against the Japanese yen and traded down.
- There is a bearish trend line formed on the hourly chart of the EURJPY pair, which is acting as a resistance for the pair.
- Today, the Euro Zone Manufacturing Purchasing Managers Index (PMI) was released by the Markit Economics.
- The outcome was positive, as there was a rise from 51.9 to 52.0 in July 2016.
Technical Analysis
The Euro collapsed and traded down to test the 113.90 support area against the Japanese yen where it found buyers. The EURJPY pair is currently attempting a recovery, but facing sellers near a bearish trend line formed on the hourly chart.
A break above the trend line could take the pair towards the 21 hourly simple moving average, which is also coinciding with the 38.2% Fib retracement level of the last drop from the 116.90 high to 113.90 low.
On the downside, the 113.90 support area holds the key for more losses.
Euro Zone Manufacturing PMI
Earlier today during the London session, the Manufacturing Purchasing Managers Index (PMI) was released by the Markit Economics. The PMI captures business conditions in the manufacturing sector, and was forecasted to remain at 51.9 in July 2016.
However, the outcome was positive, as there was a rise from 51.9 to 52.0in July 2016. The report added that “At 52.0 in July, down from June’s six-month high of 52.8, the final Markit Eurozone Manufacturing PMI® came in slightly above its earlier flash estimate of 51.9. The PMI has now signalled expansion for 37 consecutive months. The main factor underlying the drop in the headline index was a softer positive contribution from new order growth”.
The report was not bad, but the Euro failed to gain momentum. Only a break above the trend line could clear the way for a recovery in EURJPY.
