EUR/JPY: SoCGen recommends short positions

Societe Generale Research maintains its bearish long-term stance against EUR/JPY. The slowdown in US growth, low yields on US bonds and the risks of recession will all be key events for the strengthening of the US dollar. The bank's expectations are that the US currency will start to regain strength despite the Trump Administration's rumble that the dollar is too strong. Regarding the strength of the euro, we will find out today, at 2:45 pm, whether the European Central Bank will have any significant impact on the single currency.

In the meantime, the fundamental situation involves taking long positions against the yen (EUR/JPY short).

From our point of view, the trend is still declining, but approaching a key point, namely testing it. Currently, the price is approaching the supporting diagonal and the upper resistance area. In case of failure in the area, we will expect a downward movement and a break in the bearish wedge, with the price returning in a downward movement. It is important that the price goes below 118.447 and remains below that level.

Alternatively, the euro will remain strong against the yen. We expect the price to rise to the area at 120.043, with the bearish scenario collapsing.

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