March 9, 2022 15:05:03
It’s very much risk-on today as assets hammered by the Ukrainian conflict retrace some of their losses. Whether the better sentiment lasts is the main issue. But the oversold euro especially was due a bounce on numerous indicators.
Not surprisingly, EUR/JPY is gaining the most in the euro crosses, up over 1.35%. We’ve switched to a weekly chart to see the longer-term picture of this pair.
Prices had traded in a wide range between roughly 127 and 134 since the start of February 2021. More recently, we’ve had four weeks of strong selling after the high at 133.15 at the beginning of last month. This took prices sharply through the 100-week SMA at 127.05 and down to the 200-day SMA at 125.49.
Prices made a new low at 124.39 on Monday in the risk-off sell-off. This tallied with a swing high from June 2020. The subsequent retrace has been strong taking out the first Fib level (23.6%) of the May 2021 high to this year’s low at 126.68. Buyers are now trying to advance beyond next resistance at 127.93. A more significant Fib level (38.2%) sits at 128.10 and acts as following resistance.
A strong close means bulls will eye up the halfway point of the high/low move at 129.25. Much will depend on the more positive risk sentiment lasting. Tomorrow’s ECB meeting should mean more volatility too.
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