somrat4030
Well-known member
Forex Forum, A forum For All Currency Traders and Forex Experts.
EUR/JPY spent the first three weeks of October rising and then the last three weeks falling; we could see a course change again here soon. There is a proven trend-line getting tested at this time, one that dates to the May 2020 low.
It's first connecting point was created in September, but then validated in October. What I would like to see is a forceful rejection off the trend-line that indicates a flush and change in momentum. Given the overall price action since June it is seen that this could lead to a further filling out of a wedge pattern.
For traders looking for a fade into support, EUR/JPY here soon could be a good candidate. If we don't see a reaction off trend-line support then this outlook will of course change.
Moreover, Euro weakness
Traders and analysts are noting the vulnerability of the euro on multiple fronts. Firstly, ECB rhetoric remains resolutely dovish, meaning the ECB monetary policy normalisation timeline remains well behind that of the Fed and BoE's. Secondly, Covid-19 infections and hospitalisations are rising sharply in the Eurozone, prompting some countries to reimpose restrictions on day-to-day life, risking an economic slowdown in Q4 2021 and Q1 2022. Finally, European gas prices (the bloc is dependent on imports) are surging following the news of a delay to the approval process of the Nord stream two pipeline, which is now not expected by analysts to start pumping gas until the end of winter, after demand has peaked.
On the other hand, The Canadian dollar weakened to a five-day low against its U.S. counterpart on Wednesday as oil prices fell and domestic data showed inflation climbing as expected to the highest since February 2003. Canada's annual inflation rate accelerated to 4.7% in October as energy prices jumped, data from Statistics Canada showed. The increase matched analysts estimates. The Bank of Canada says inflation risks have increased but continues to view the recent dynamics as transitory.
U.S. crude prices fell 1.2% to $79.77 a barrel, while the Canadian dollar was trading 0.2% lower at 1.2584 to the greenback, or 79.47 U.S. cents. The currency traded in a range of 1.2540 to 1.2595. Last Friday, it touched its highest level in over five weeks at 1.2604.
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