It’s no secret that things look bleak for Greece. Deal or no deal, things are likely going to get worse before they get better. This unrest can be seen in the price action through the recent break below the 1.1050 key support handle for EURUSD.
However those looking to play off any Euro weakness will likely see more follow through with EURJPY, a pair that has also shown weakness recently and broken through several layers of support.
Why favor the Yen over the US dollar?
Without getting too distracted by underlying themes, as global uncertainties grow the Yen tends to appreciate as investors are attracted to its safe-haven status. The same idea applies to the US dollar, which also benefits from a risk-off environment, however the Yen often outperforms the USD in this category.
That said, the price action on the higher time frames is all we really need to make our trading decisions. And after an impressive 1,500 pip rally between April and June, EURJPY looks ready to resume the downtrend that began last December.
With the pair currently hovering between support at 133.10 and resistance at 135.10, those looking to trade EURJPY will likely need to wait for a more favorable entry.
Note: This pair is prone to weekend gaps of late and this weekend may not be an exception. Therefore take caution selling this pair late in the week to avoid getting caught on the wrong side of a gap at the open.
Summary: Wait for a daily close below 133.10 and then watch for a retest as new resistance. Alternatively, watch for bearish price action on another retest of resistance at 135.10. Support below 133.10 comes in at 131.50, 129.00 and 126.85.