EURJPY Broken Trend Line Retest (May 22, 2017)

Price dipped to the 122.50 minor psychological support then pulled back up to the broken support, which might now keep gains in check.

Applying the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the broken support zone. However, the 100 SMA is still above the longer-term 200 SMA on the 1-hour chart so there may still be room for some gains.

Stochastic is already turning down from the overbought area to suggest that selling momentum is about to kick in. If so, EURJPY could make its way back down to the swing low or create new ones.

Over the weekend, the focus was back on Brexit issues as the UK said that it is not willing to pay the bill that the EU is charging. This led to speculations that talks or even the Brexit itself might get delayed, lending some support for the shared currency. There's not much in the way of top-tier data from the euro zone today so traders might turn their attention to the speech by UK PM May.

As for the yen, Japan's trade balance came in weaker than expected at 0.10 trillion JPY versus the consensus at 0.25 trillion JPY. To top it off, the earlier reading was downgraded to show a smaller surplus of 0.11 trillion JPY. Still, market sentiment and US bond yields could drive yen pairs around.

By Kate Curtis from Trader's Way