The Euro to the Japanese Yen is consolidating before the next move
As trading today is quite active in the major crosses we will take look at the EURJPY and the prospects for the next move in the pair. In our opinion it is very likely that due to the unfolding risk off sentiment it will be lower.
This is why we are advising our readers to buy puts below 140.90-141.00 support level. Without undertaking additional risks this strategy should be played on a daily basis while the breakout should be confirmed on the hourlies.
The pair started trading on Wednesday in a tight spot, pressured from the outcome on the budget deal and the expectations that the Federal Reserve is free to act once fiscal challenges are out of the way. The bipartisan agreement reached in Congress is likely to pass both houses there.
In Asia the Euro has dropped from around 141.60 protractedly into the European session where it reached 140.90 after London trading kicked off in full speed. A mild rebound has started since and we were taken back to 141.60 as the Euro broke higher against the US dollar.
Our scenario from this point on points to a drop if we manage to stay below 141.80 in the next 24 hours. However should that level be broken we will return to bullish bets and will be buying calls on a break.
Tomorrow's US data is likely to be quite key, so we will keenly expect what will the unemployment benefits application be and ofcourse the all important retail sales figures. For now we are advocating a cautious approach with daily puts buying below 140.90.