FXStreet (Guatemala) – EUR/JPY is currently trading at 134.89 with a high of 135.15 and a low of 133.86.
EUR/JPY remains below the gap post the Greek referendum and NO vote, although is attracting bids as we progress through early Asia ahead of the Tokyo open. Gold was up $4.00 on the electronic open and has continued on the bid to reach $1,174 spot given its safe haven roll.
EUR/JPY price action
EUR/JPY was offered from 136.20 and Friday’s close down to 133.90 before 133.86 attracting demand on the electronic open where the single currency rallied 56 pips and dragged the cross with it to 135.03 over the same 30 minute stick.
EUR/JPY fundamentals
The market will be lead around the outcome of the Greek referendum. The No result, on 85% counted votes and 61.5% of those being a no, leaves the cross open to downside pressures on safe haven flows given the increased height of uncertainty. One other trade to look out for comes with the possibility that the SNB may wish to prevent EUR/CHF falling to previous 2015 lows at 0.9665 and that could support the cross fundamentally. However, we await the stock markets reactions with Tokyo first and then European bourses and Wall Street returning after the 4th July holiday’s.
The result leaves Athens with a stronger case to come back to the negotiating table saying that they put the Eurozone’s demands to a democratic test and that they were rejected by the people. However, it also opens the door for a Grexit if mutual ground cannot be made between the eurozone and Greece.
Now what post Greek referendum No result?
Greece will now commence negotiations with their creditors tomorrow in order to try to restore the banking system for Tuesday, as stated by Tsipras. EU leaders, Merkel and Hollande, were calling for a summit on July 7th while Tusk, President of the European Council, recently confirmed this earlier.
Greek Finance Minister Yanis Varoufakis has called the result, “a big yes to a democratic Europe”. Through the wash of all of this Greek risk, fundamentals also need to include that of Japan’s own domestic concerns and subsequent policy from the BoJ where risks remain to the downside for the Yen as the timings of a 2% inflation target were recently put back, weighing on the currency.
EUR/JPY technically
There has been a bullish target zone for EUR/JPY of 140.70/141.06 but these recent highs are less favourable when mixed with the fundamentals. 133.76, being 28 June lows are now back in to focus within April’s uptrend from 129.09.
Valeria Bednarik, chief analyst at FXStreet explained separately that with the technical indicators heading sharply lower below their mid-lines, with the price well below its moving averages, all of which should keep the risk towards the downside. “Having been range bound for the last few days, the pair is now poised to extend its decline, with the mentioned support at 133.77, being the critical level to watch, as a break below it, chances are of an extension down to the 135.20 region, where the pair presents several daily lows and highs since late April.”
(Market News Provided by FXstreet)