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EUR/JPY Technical Analysis: Most oversold since April 2017

  • The 14-day relative strength index (RSI) shows the EUR/JPY is most oversold in over a year.
  • Still, the corrective rally can remain elusive if the Italian bond market sell-off continues.

Daily chart

Spot Rate: 126.80

Daily High:127.28

Daily Low: 126.51

Trend: Bearish but oversold

Resistance

127.56 (Aug. 18 low)

127.63 (descending 5-day MA)

128.05 (August 2017 low)

Support

126.51 (session low)

125.80 (May 2017 high)

125.31 (June 2, 2017 high)

The 14-day RSI has dropped to 26 - the lowest since April 32017, signaling the sell-off is overdone/oversold conditions. So, a corrective rally could be on the cards, although it all depends on the performance of the Italian bond markets. The 10-year Italy-German yield spread rose to 232 basis points on Monday - the highest level since December 2013. The common currency could take another beating if the yield spread rises further in the EUR-negative manner.

 

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