Euro / Japanese Yen (EUR/JPY) extended downside movement on Monday ahead of very crucial inflation data about Eurozone, the pair is currently battling 50% fib level resistance, if the inflation data up beats expectations, the pair might break this major resistance level to resume the uptrend.
As of this writing, EUR/JPY is being traded near 140.57; immediate resistance can be noted around 140.92 which is 50% fib level of last major move, a break above 140.92 could expose 142.00 i.e. psychological level and 61.8% fib level. Above 142.00 handle next major milestones are being noted around 143.40 and 145.64.
On downside, support can be noted at 139.79, 38.2% fib level, ahead of 138.43 which is 23.6% fib level. A break and daily close below 138.00 handle will be seen as very bearish hence exposing more downside movement towards 135.00.
Today at 10:00 GMT in London session, EurStat will release Eurozone’s Consumer Price Index (CPI) reports – a main gauge to assess inflation – for the month of January. According to median projection of different analysts, surveyed by Bloomberg, CPI ticked down by 0.4% in January as compared to 0.3% in a month before. Similarly, CPI declined to 0.7% last month compared with 0.8% in the same duration of a year before, according to the forecast. Generally speaking, a high reading close to 2% is seen positive for the economy and vice versa. So if we see worse than expected outcome, it will be bearish for EUR/JPY.
Later in the US session, a private institute Markit Economics is scheduled to release preliminary reading of US Services Purchasing Managers Index (PMI) for the month of February. A high reading might stir short-term bullish momentum in the US Dollar and vice versa.