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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 137.17, 136.22, 135.04
- Resistance: 138.12, 139.30, 140.03
The Euro dropped the most in a month against the Japanese Yen, sliding to set a new three-week low. Near-term support is in the 137.17-38 area marked by a formerly broken channel top and the 50% Fibonacci expansion. Alternatively, a reversal above the 23.6% Fib at 139.30 clears the way for a test of the 14.6% expansion at 140.03.
Risk/reward considerations argue against entering short with prices in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com