• EURJPY breaks pattern resistance

• Bullish signal triggered above 161.8 level

• Watch out for Eurozone PMI’s & PPI

• Potential price target at 164.208

• Bloomberg Model: 80% chance EURJPY – (161.56 – 165.06)

The EURJPY triggered a bullish signal on Wednesday after prices breached the falling wedge pattern.

Over the past few days, the minor currency pair has been trending lower with yesterday’s rebound creating a foundation for bulls to re-enter the scene.

According to Thomas Bulkowski, in his book “The Encyclopedia of Chart Patterns”, upward breakouts from falling wedges;

• are expected to meet their price target 62% of the time.

• Have a breakeven failure rate of 26%.

The highest high in the wedge -165.335- is used as the measured move objective (target).

At the time of writing EURJPY is testing the golden Fibonacci level of 161.8 at 163.368.

Interestingly, prices remained steady despite inflation figures from Europe slowing more than expected and reinforcing bets around the ECB cutting rates in June. This could be based on the Yen weakening against most G10 currencies including the euro this morning.

Note: Traders have fully priced in a 25 basis point ECB rate cut by June 2024.

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Investors may direct their attention toward the incoming Eurozone S&P Global Services PMI and PPI figures on Thursday for more insight into the health of the Eurozone economy.

Focusing on the technical picture, a possible near-term level where EURJPY bulls may expect some resistance before reaching the price target is 164.208.

In the event of a failed falling wedge pattern, EURJPY bears may look forward to the following key levels for support.

• 163.022

• 162.668

• 162.163 – 100% Fibonacci level

The Fibonacci level is taken from March 8th 2024 high at 162.163 to March 11th 2024 low at160.209.

Bloomberg’s FX model forecasts an 80% chance that EURJPY will trade within the 161.56 – 165.06 range over the next one week.