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FxWirePro: EUR/JPY recovery capped at 200-DMA, German political uncertainty could hamper upside

EUR/JPY chart - Trading View 

Spot Analysis:

EUR/JPY was trading 0.35% higher on the day at 129.51 at around 09:15 GMT.

Previous Week's High/ Low: 130.69/ 129.66

Previous Session's High/ Low: 129.35/ 128.60

Fundamental Overview:

According to data published bt Eurostat, Eurozone final CPI for August came in at 3% on a yearly basis, matching flash estimate and consensus.

Core CPI also matched original estimates and 1.6% during the reported month. 

On a monthly basis, the bloc’s CPI printed at 0.4%, while the core CPI numbers came in at 0.3%, both meeting market expectations.

Euro little changed after CPI data. German political uncertainty weighs on the upside as investors grow increasingly skittish ahead of nation's upcoming general election.  

Technical Analysis:

- EUR/JPY bounced off from monthly lows with 'Hammer' formation on Thursday's candle

- Recovery in the pair was capped at 200-DMA which is stiff resistance at 129.56

- Price action is below cloud and major moving averages

- Momentum remains bearish, RSI is below the 50 mark

- Volatility is low and shrinking and could see major shift in trend

Major Support and Resistance Levels:

Support - 128.27 (55-week EMA), Resistance - 129.56 (200-DMA)

Summary: EUR/JPY was trading shy of 200-DMA, retrace above will negate any further downside. Rejection at 200-DMA will see downside resumption. 

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