Chart of the Day EURJPY
EURJPY Playing An Impulse Pullback - Probable Price Path
The irony of the US being in an official recession, but the S&P500 wiping out its 2020 losses! Global risk momentum remained largely intact overnight as Nasdaq hit a record and the S&P500 erased 2020 losses on recovery hopes even as the World Bank warned of the worst recession since WW2, Saudi Arabia said it would not sustain additional output curbs after June, and North Korea said it will shut down communications with South Korea. The Fed expanded its Main Street Lending Program which will be open to eligible lenders soon with lower minimum loan and extending the principal payment deferral, ahead of its policy decision later tonight. The S&P500 extended gains by 1.20% while VIX rose to 25.81. UST bonds gained with the 10-year yield at 0.87% ahead of FOMC. The 3-month LIBOR eased to 0.3098% and the Treasury sold $63b of 3-month bills at 0.17% and $54b of 6-month bills at 0.185%.
EUR: European Central Bank President Lagarde said that increasing the scale of the emergency debt buying plan reflects the determination of the central bank members and adopts appropriate measures to ensure that inflation is moving towards the goal. The central bank will also help to resolve the issue without compromising independence, complying with EU laws and the principles of the European Court of Justice conflict. She also urged the EU to implement the recovery fund plan as soon as possibleThe German cabinet meets on Friday and is expected to implement the details of the new round of economic stimulus plan.
JPY: Japanese Prime Minister Shinzo Abe said that the government cannot increase debt indefinitely, it will promote income and expenditure reforms to achieve fiscal balance
From a technical and trading perspective, the EURJPY is currently mapping an impulsive decline from the 124.43 cycle high. The current impulse move lower should be the first wave in a minimum of a three wave decline to correct the advance from the mid April lows. Bears will be watching for an initial reaction low to allow for a near term corrective price action versus the initial leg lower to ideally test but fail a move back to test offers towards 123, from here intraday reversal patterns should see bearish exposure rewarded targeting a test of the projected equality objective towards 120 as the primary corrective target.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!