News of Israel potentially dropping missiles on “a site” in Iran sparked risk aversion that pushed safe havens like the Japanese yen higher.
Will today’s headlines be enough to drag EUR/JPY to a key range support?
We’re taking a closer look at the 4-hour time frame:
EUR/JPY 4-hour Forex Chart by TradingView
In case you missed it, ABC News cited a U.S. official who said that Israeli missiles have hit “a site” in Iran.
There are no deets yet about the attack, but the prospect of escalating military tensions between Israel and Iran has traders buying safe haven currencies like the dollar, yen, and the Swiss franc.
It doesn’t help the euro that European Central Bank (ECB) officials have been hinting at an interest rate cut in June. ECB Vice President Luis de Guindos himself shared that “…In June we’ll be ready to reduce” their monetary policy stance if things continue as they evolved lately.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the euro and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Risk aversion and ECB interest rate cut bets helped drag EUR/JPY below the 164.00 psychological level. In fact, the pair is now trading closer to 163.80, which is already below the 100 SMA and the mid-range line in the 4-hour time frame.
Depending on how the headlines play out, we may see EUR/JPY drop by another 100 pips to the 162.50 range support zone that’s been an area of interest for the pair since mid-March.
Then, depending on how EUR/JPY reacts to its previous inflection point, we could either see a longer-term downside breakout for the pair or a range bounce that could send EUR/JPY to the 164.00 mid-range or 165.25 range resistance areas.
What do you think? How low can EUR/JPY go before we see sustained buying pressure for the euro?
