The euro's performance continues to vary greatly between different currencies. Against the greenback, It appears to be attempting a major breakout from a recent range, as was pointed out in our comprehensive analysis of the EURUSD from earlier today. However, things look different against the strong yen.
The ZEW institute just revealed that the economic sentiment in the Eurozone surprisingly jumped in January, beating the market forecasts. This comes just a day after it was revealed that global economic activity was less affected in the fourth quarter than initially feared.
As can be seen on the 4H chart above, EURJPY's recent uptrend may already be completed. This is substantiated by the fact that the price action has reversed from the major resistance area (in red) and broken down below the limits of the ascending channel.
The breakdown occurred in a classic way: an initial probing was followed by a snap throwback to a support-turned-resistance (the channel's middle line). The decisive breakdown to the 38.2 per cent Fibonacci retracement level at 129.995 was similarly followed by a throwback to the channel's lower limit. The 38.2 per cent Fibonacci represents a significant threshold due to its proximity to the psychologically significant support at 130.000.
With the second throwback being completed, the price action would most likely attempt to break down below the 23.6 per cent Fibonacci at 130.609. This would allow for a retest of the 38.2 per cent Fibonacci and eventually the 61.8 per cent Fibonacci at 129.003.
As was revealed, Eurozone's economic sentiment jumped to 49.4 index points, easily beating the preliminary forecasts of 29.2 index points. This also measures the fourth month of consecutive improvements, rising from the 26.8 index points that were recorded a month prior.