The Japanese Yen could continue slowly trending lower
As we crossed the middle of the week the new day is offering yet another trading opportunity. We are seeing the EUR/JPY pair as being steady for now and gearing up for another move to the upside. The levels around 137.60 will provide initial support in our views to buy daily calls on this pair.
Should we see a drop of prices below 137.50 and an hourly close, a reversal could be on the way, which will trigger a reactionary position reversal from our side. For now we believe that the correction lower is temporary and the pair is headed towards 138 in the coming days.
The main implications for this move are behind the trade balance data released from Japan in the beginning of this week. While exports have risen, the nominal trade deficit was further into negative territory than expected, which should provide monetary policy authorities in Japan with further impulse to print more Japanese yen.
For now we would be keeping an eye at the speech of Federal Reserve's chair, Janet Yellen at the annual Jackson Hole symposium. Mario Draghi will follow tomorrow potentially providing more insight into the thinking of the European Central Bank.
Meanwhile positive data from the US should be keeping the overall risk sentiment bullish which should result in higher prices for pretty much all Japanese yen crosses. For now the main hurdle for this pair is closing above 137.90 on a daily basis.
On the downside we are seeing the first support around 137.50-60 followed by stronger levels around the 137.10-20 area which if overcome can lead to another protracted decline towards the base on the daily charts currently around 135.70