EURJPY and the world’s largest free trade zone
Japan ranks third in the world economy after the USA and China. With the Economic Partnership Agreement between the EU and Japan, which came into force in February 2019, both economic areas together make up the world’s largest free-trade zone. The dismantling of trade barriers and taxes is intended to stimulate growth in both industrial regions.
Of course, this event is still too new for a meaningful assessment to be made. However, the Bank of Japan’s TANKAN, the Short-Term Economic Survey in Japan, shows a decline in the business expectations of the major Japanese manufacturers for March compared to the level of three months ago. This is not so much because of the free-trade agreement as the economic slowdown in China and the associated decline in exports.
From a chart technical point of view, the currency pair between the economic areas is on an exciting threshold.
The area around 124.70 could be decisive for further development. If the bulls manage to lift the market above this threshold, the next significant resistance could be in the 127.10 area. If the bulls cross this resistance zone with ease, then further resistance zones are waiting at 129.5 and 132.00 on the way to the next significant structural level at 134.30.
However, if the bears take over and the EURJPY fails at 124.70, there could be support at 123.30. Further down are three zones, at 121.30, 120.00 and 118.90, which could serve as support. Below this, a re-evaluation would be required.
The MACD histogram is in the negative range. The MACD line itself is below its trigger line. However, there are tentative signs that the lines could move towards each other. If the MACD line crosses the trigger line from bottom to top, this could be interpreted as a bullish sign.
EURJPY Daily Chart | Source: ActivTrader
Written by Daniel Schuetz, External Analyst
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