"We're still hugely vulnerable to political risks. Polling for the first round of the French election is hugely tight. We have no clear indication of how the drama in North Korea will play out. And those factors are more important to us than the ebb and flow of earnings news in the short term."
- Christopher Jeffery, Legal & General Investment Management (based on Bloomberg)
Pair's Outlook
EUR/JPY retraced back from the bottom boundary of a longer-term broadening wedge on Monday, suggesting that bulls may prevail for the remaining trading week. The current upside volatility has already moved the Euro through the weekly R1 and the monthly S1 circa 117.22. If no fundamentals change the pair's direction today, a close above this level is the most likely scenario. Technical indicators are bearish in both shorter and longer term; nevertheless, it should be taken into account that the Euro remains sensitive to any new information regarding French elections on Sunday.
Traders' Sentiment
Market sentiment has remained at the same level as yesterday, with 70% of traders holding open positions. In addition, 65% of pending orders are to buy the Euro.
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