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Forex: EUR/JPY consolidates around 129.00 support, Eur PMI on tap

The EUR/JPY is trading down 44 pips at 129.10. Earlier in the session the pair traded just below the 129.00 level, but again found firm support and is attempting to recover some losses. It appears the HSBC China PMI (50.5 actual vs. 51.4 estimate) data released earlier in the session has caused some un-winding of Yen carry trades as they are lower across the board. The economic calendar out of Europe will also be in focus with both German PMI (7:28 GMT) and European PMI (7:58 GMT) releases due out.

“Despite early strength, lack of follow trough finally weighted on yen crosses that edged lower on the day. The EUR/JPY has briefly tested levels above 130.60 resistance, but quickly retraced and a lot has to do with USD/JPY being unable to take 100.00. In the 4 hours chart however, the upside remains favored as a dip below 129.00 triggered a strong bounce, with indicators in positive territory and price above 100 and 200 SMA,” Noted Val Bednarik of FXStreet.com.

The FXStreet.com Trend Index remains in Strong Bullish set up on the 4 hour time frame, while the OB/OS Index remains Neutral. Looking at the daily chart, it will be important for the pair to close above the short term uptrend support line (128.90) which connects the daily lows of the last 5 sessions. A move below there could promote further weakness down to 127.20 (previous resistance, now support on daily chart). First resistance sits at 129.40 (support break on 1 hour chart), followed by 129.80 (supply candle on 1 hour chart).

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