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EUR/JPY breaches August lows, 136.50 next major support

FXStreet (Bali) - EUR/JPY is breaking through a double bottom printed in early Aug/Sept, with the lowest so far reached at 135.60, which represents the cheapest level since Nov 2013.

The move down comes on broad-based Yen appreciation in early Asia as the main driver, pushing all Yen crosses over 20/30 pips lower compared to last Friday's NY closes. With regards to the Euro, we saw comments from ECB Governing Council Member Ewald Nowotny, over the weekend, saying that the Euro is very likely to keep weakening against other major currencies, "due to the different tendencies in interest rate policies."

Technically, while the recent bearish breakout in the pair communicates a market still highly committed to unwind over-stretched Yen long positions, there is some major support still being faced at 135.50, as per the triple top seen in Oct/Nov 2013. Once below this latter, an acceleration towards 135.00 and beyond seems more likely. On the topside, any strength should meet plenty of grateful sellers at key intraday selling points, although it looks like at some point, the pair is due for a short squeeze given the sharp decline since topping at 137.90 on Oct 8th.

ECB's Nowotny: Euro very likely to keep weakening against major currencies

European Central Bank Governing Council member Ewald Nowotny, Ssaid over the weekend, that the Euro is very likely to keep weakening against other major currencies, noting "due to the different tendencies in interest rate policies, there is a great likelihood that this leads to a further depreciation of the Euro.”
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