The EUR/JPY currency pair is showing a very interesting reversal candle on the daily time frame.
Is the pair ready to return to its longer-term trend?
We are looking at the daily chart of the EUR/JPY pair today!
EUR/JPY Daily Currency Pair Chart by TradingView
In case you missed it, the yen has been gaining a lot of points lately, probably due to Japanese officials intervening in the foreign exchange markets and traders liquidating their yen positions.
The euro did not perform badly either, losing some points against the pound, the Swiss franc and the Japanese yen, but it also traded in the green against the rest of its major peers in July as political uncertainty in the region eased and European Central Bank members confirmed their “prudent” approach to cutting interest rates.
Remember that directional biases and volatility in market prices are usually driven by fundamentals. If you haven’t done your homework on the EUR/JPY yet, it’s time to check out the economic calendar and stay up to date with the daily fundamental news!
The EUR/JPY pair, which hit a 2024 high near 175.40, has fallen and is now trading near the 166.83 area.
What caught our attention today is the appearance of a hammer on the daily chart of the EUR/JPY pair. Specifically, a hammer around a potential support area.
That’s right! After a sharp decline, the EUR/JPY pair has formed a bullish reversal candle near the 38.2% – 50.0% Fibonacci retracement levels and between the 100 and 200 simple moving averages.
Does this mean that the EUR/JPY pair is ready to extend its upward trend in the longer term?
Look for bullish candles above the psychological level of 166.00, which may attract enough buyers to push the EUR/JPY pair to the previous areas of interest of 168.00, 170.00, or 172.00.
Of course, the EUR/JPY downtrend may be in a resting phase. If the next EUR/JPY candles close below the hammer wick or the 200-day SMA, the pair may not be finished in its downtrend. It may retest the previous lows at 162.00 or even head towards 160.00 before seeing sustained demand.
What do you think? Will the EUR/JPY pair return to its upward trend in the next few weeks?