Forex Market: EUR/JPY daily trading forecast

Friday’s trade saw EUR/JPY within the range of 136.44-137.11. The pair closed at 137.04, gaining 0.09% on a daily basis.

At 6:18 GMT today EUR/JPY was up 0.06% for the day to trade at 137.10. The pair touched a daily high at 137.25 at 3:00 GMT.

Fundamentals

Euro zone

Business climate in Germany probably worsened in October, with the respective gauge slipping to 104.1 from 104.7 in September. If so, this would be the lowest index reading since December 2012, when it stood at 102.4.

The IFO Business Climate Index reflects entrepreneurs’ sentiment in regard to current business situation and their expectations for the next six months. The index is based on a survey, conducted by phone and encompasses 7 000 companies, that operate in sectors such as manufacturing, construction, wholesaling and retailing industry. The Business Climate Balance represents the difference between the percentage share of respondents that are optimistic and the share of respondents that are pessimistic. The balance can fluctuate between -100, which suggests all responding companies assess their situation as poor and expect business conditions to deteriorate, and +100, which suggests all responding companies assess their situation as good and expect an improvement in business conditions. In order to calculate the IFO Business Climate Index, the Balance is normalized to the average of a base year, which currently is 2005.

The IFO Business Climate Index is comprised by two equally-weighted sub-indexes – a gauge of expectations and a gauge of current assessment. The IFO expectations index probably dropped to 98.4 in October from 99.3 in September, as the latter has been the lowest since December 2012. The IFO current assessment index probably slid to 109.5 in the current month from 110.5 in September. If so, this would be the lowest index level since June 2013. In case any of the gauges registered a larger than projected decline, this might have a bearish effect on the common currency.

The CESifo Group is to release the official numbers at 9:00 GMT on Monday.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 136.86. In case EUR/JPY manages to breach the first resistance level at 137.29, it will probably continue up to test 137.53. In case the second key resistance is broken, the pair will probably attempt to advance to 137.96.

If EUR/JPY manages to breach the first key support at 136.62, it will probably continue to slide and test 136.19. With this second key support broken, the movement to the downside will probably continue to 135.95.

The mid-Pivot levels for today are as follows: M1 – 136.07, M2 – 136.41, M3 – 136.74, M4 – 137.08, M5 – 137.41, M6 – 137.75.

In weekly terms, the central pivot point is at 136.44. The three key resistance levels are as follows: R1 – 137.71, R2 – 138.39, R3 – 139.66. The three key support levels are: S1 – 135.76, S2 – 134.49, S3 – 133.81.