As we approach Thursday’s ECB rate decision, one Euro pair in particular is approaching a key level that has yet to be tested as new resistance since the February 18th break.
EURJPY has been treading water below the 126 handle since it closed below the level last month. However, the pair has yet to retest it as new resistance, indicating that a move back to this area could be in order before the next leg lower materializes.
With the pair currently trading 130 pips below 126 and this week’s ECB decision just 60 hours away, there’s a chance we could see technicals and fundamentals collide in a way that presents a favorable opportunity.
To be clear, I have no interest in trading this or any Euro pair before Thursday as doing so is far too risky. Instead, I plan on watching how EURJPY reacts at the 126 level following Mario Draghi’s decision.
Of course if the pair fails to reach this area and is thus unable to form a favorable setup, I will pass on trading it and look elsewhere for something that fits my criteria.