Chart of the Day EURJPY
Testing pivotal support EURJPY
Risk-off again for financial markets as China’s coronavirus continues to escalate in terms of number of infections and deaths as well as number of countries reporting confirmed cases. China has extended its Chinese New Year holidays to 2 nd Feb.
Yesterday, the S&P500 slumped 1.6% (with the DJIA wiping out year-to-date gains),while the VIX spiked to 18.23 (highest since October 2019), and UST bonds rallied to push the 10-year yield down to 1.61% (also lowest since October 2019), albeit the six-month bill auction saw tepid demand.
With the World Health Organization director-general headed to China, expect more news headlines to drive market sentiments in the near-term. With many Asian markets either still closed for the Chinese New Year festive holidays or just re-opening, the risk-off tone attributed to the coronavirus may continue to dominate today.
The economic data calendar is also very light with only US’ durable goods orders, conference board consumer confidence, Richmond Fed manufacturing, S&P CoreLogic home prices. Only ECB’s Lane and Hernandez de Cos are speaking. For the week ahead, look for the FOMC rate decision (with no rate changes and likely minimal statement alterations, but watch Powell’s comments and a potential tweak to the IOER), BOE rate decision on Thursday (where a 25bp rate cut is highly anticipated), US earnings results (Apple, SAP, Facebook, Caterpillar etc), and UK’s Brexit from the EU on Friday.
From a technical and trading perspective, the EURJPY has witnessed a sharp correction as per the last review of this pair. Price is now testing pivotal symmetry swing support sited at 119.80, this level also represents the weekly S2 pivot point, as well as the break point for last years With an Asian gap still left open from Sunday evening’s open, there is the potential for price to set a base at these levels, confirmation of this Potential Price Reversal Zone would require a daily close back through 120.50, filling the gap and closing above the monthly & Daily Volume Weighted Average Price’s. As per yesterday's analysis of the US500, a reversal from current levels in the S&P would likely add support to a turnaround in the EURJPY.
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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!