Back to back bearish candles on EUR/JPY, Yen to appreciate

On the eve of the high impact data in Japan such as monetary policy statement, Trade balance and industry activity data, we believe Yen is likely to appreciate versus Euro.

Japan's data this week would normally upbeat, outlook is unchanged. The data painted a generally upbeat picture of the economy, supporting our view that the current recovery will continue.

Technical perspectives:

In addition to the above fundamental reasoning, on daily chart of EUR/JPY, back to back bearish candlestick patterns appeared on downswings to evidence short term downtrend. It is observed that formation of shooting star, spinning top & a hanging man appeared on peak of the uptrend to suggest reversal & a bit correction.

While this bearish sentiments are fortified by both oscillating indicators such as RSI (14) & slow stochastic signal overbought scene for now.

RSI (14) downward converging sign at 58.9648 and %D line crossover above 80 levels indicate overbought situation. (%D line = 69.1387 & %K line = 61.5300).

If the pair fails to test support levels at 138.3605 then it would undoubtedly to the levels of 137.6420 first & then until 136.3333 levels can't be disregarded.