The spotlight is on the conflict between Russia and Ukraine these days, so risk sentiment has been a big catalyst for price action.
Can EUR/JPY sustain its bullish break?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/CAD’s pullback setup ahead of the RBNZ decision. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Australia’s wage price index rose 0.7% as expected in Q4 2021
Australian construction work done sank 0.4% vs. projected 2.6% gain
RBNZ hiked interest rates from 0.75% to 1.00% as expected
RBNZ members debated between 0.25% and 0.50% hike, OCR track adjusted higher
RBNZ head Orr: Capacity pressures on economy continue to tighten
Asian markets bounce while waiting for Putin’s next moves
German GfK consumer climate index fell from -6.7 to -8.1 vs. -6.2 forecast
ECB official Holzmann suggests raising rates before ending bond purchases
ECB official Villeroy to gauge indirect impact of Ukraine crisis by March
U.K. foreign minister Truss: If Putin escalates, int’l community will increase sanctions
Upcoming Potential Catalysts on the Forex Economic Calendar:
BOE monetary policy report hearings at 9:30 am GMT
Eurozone final headline and core CPI at 10:00 am GMT
BOE MPC member Tenreyro’s testimony at 5:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: EUR/JPY
Markets seemed to breathe a sigh of relief over the past trading sessions, as a round of sanctions on Russia might be enough to discourage Putin from invading Ukraine.
While safe-haven currencies like the yen were giving up earlier gains, the euro got an additional boost from ECB official Holzmann’s remarks suggesting that they could raise rates even before their bond purchase program ends.
This was enough for EUR/JPY to bust through its short-term falling trend line, indicating that a reversal from the downtrend is in the works. The pair also seems to have completed its retest of the broken resistance, which encouraged more euro bulls to charge.
The next area of interest to keep tabs on is the 130.50 to 131.00 zone, which also happens to be the neckline of a small inverted head and shoulders pattern.
A break above this level, which is spanned by the dynamic resistance at the moving averages, could confirm that a bigger climb would follow. For now, though, the 100 SMA is still below the 200 SMA to reflect selling pressure.
Stochastic is already turning higher without even dipping into the oversold region, suggesting that buyers are eager to return.
Sustained risk-on flows might keep lifting this pair throughout the next session. Just make sure you pay attention to global headlines to gauge if investors might shift back to risk-off mode!
