This year as well, continue selling euros! Euro-yen selling strategy!

◎ Euro Selling Strategy

1) EUR/JPY Sell Strategy

EUR/JPY Sell

Entry 123.00 yen

Stop 125.00 yen

Limit 117.80 yen

2) Fundamentals Analysis

・Support rating for the French president and protests

・France budget deficit

・Italian government, fiscal problems

・Economic data from European countries

・Brexit issues

Last year, euro selling progressed due to the Italian budget issue. The Italian budget was settled toward the end of the year, but risks in the euro area remain. The factors that drove euro buying in 2017 were a strong economy and tapering/tightening policies. QE ended from January 2019. Although rate hikes are mentioned for later, the expectations have faded. The European economy has weakened compared to 2017.

Moreover, the key trigger for the 2017 rise was the end of the French presidential election and the retreat of EU dissolution concerns. Many elections are planned in Europe this year. It is not like the French presidential election. Ahead of elections, far-right parties have advanced. Fears of EU dissolution are spreading again.

This suggests that the euro could return to levels seen at the time of the French presidential election.

3) Technical Analysis

EUR/JPY Weekly Chart

EUR/JPY Timeframe Chart

What to watch on the weekly chart is the gap that opened during the 2017 French presidential election that has not yet been filled. This flash crash affected cross currencies across the board, and the euro/yen also declined. While estimates of the bottom vary among firms, the gap-fill was nearly complete. I don’t necessarily rely on gap-fill, but I am paying attention to it.

Having broken last year’s support and low lines, they might become resistance lines.

Looking at the intraday chart, the convergence triangle of the downtrend and the rebound line seems ready to break in one direction. If it breaks downward, I plan to enter. In that case, set the stop at last year’s low of 125.00 yen. Set the limit at the 2017 French presidential election level of 117.80 yen.