EURJPY - A Classic Tale

EURJPY DAILY as of 9.06

The statements made today by ECB President Mario Draghi has maintained the Euro in a steadier tone higher while the USDJPY have gained from the positive gains in the ADP job growth for private companies have increased by 201,000 new jobs for August.  

As a result, the Euro advanced to the 1.2650 registered high as of this writing and the USDJPY moved to 79.02 levels. Thus these two majors and market sentiments had spilled-over towards the EURJPY cross rate. And moved to the current price of 99.70; breaking away from the classic consolidation and follow-through movements from a low of 97.90 and a high of 99.00. Notice the period covered from the consolidation since August 17 until today's market price action from the reports.

As a matter of due diligence, the market potential in choosing the appropriate currency pair was the EURJPY, the GBPJPY cross rates versus the USDJPY; instead of the single-currency pairs. Why not the Euro? Well, the sensitivity of the market timing for the EURO while the ECB President Mario Draghi was speaking was more event risk compared to the cross and the USD vs. the Japanese Yen as the best correlated currency.

Please view charts below reflecting the correlation between the three majors pairs and how watch correlation becomes a cross trading opportunity with a well defined risk factor. Likewise, this defines the earlier statements made in reference to the consolidation pattern of a cuurency and its potential aftermath as to the market directional trend from a breakout period. Essential market timing is vital for this trading approach!

USDJPY DAILY as of 9.06

The market price reaction spilled over combining the two fundamental reports that led the USDx to hold its ground as the jobs numbers were higher than most have expected. This will likewise provide BOJ the necessary relief as to market intervention too close for comfort at the previous price levels as exporters have been suffering from a much stronger Yen.

The first line of resistance is slightly close to the 79.20 levels where the current high is registered at the 79.00/even levels. But we still have a few more hours and Friday's reports would be vital for the market direction. Expect the normal pullbacks as the last trading day for the week would end on a higher note since volumes and volatility would obviously increase in the next COT report by next week. Watch the GBPJPY as this also has a good market potential to check its market price behavior in relation with the Japanese Yen.