Japanese Yen needs to reach an equilibrium with Euro.

From the graph above on EUR/JPY, from yesterday night till GMT +8 1500hrs, there was a spike of up to 85 pips to a high of 130.51(My analysis was right but i entered the trade at the wrong time and my SL was hit, refer to trading psychology and discipline on how to prevent it! Haha). Since then, it has been sliding down to the current level of 129.62

Was it due to market retracement? Partly so, but behind this slide, lies one very interesting assumption of it, which is the need for Japanese Yen to reach an equilibrium with Euro.

A free trade agreement has been agreed in principle between Japan and Euro at the start of the month, even though it has yet to be penned down yet.

In order for a trade agreement to work, the currency of both countries can't be too expensive for the other to utilize. The current reality stands at Euro being too expensive to the Japanese market, if this persists, Japanese have to spend more in order to bring in goods from Euro which doesn't make sense to Jap importers. Therefore, behind the scene, i believe there is certain mechanism in work to bring Japanese Yen up to a level where it is on par to Euro for the benefit of both countries.

This slide is going to be just the start of a great decline, look out in the event if it crosses the 50MA mark at 129.48, from there i believe it will continue this slide. Set your leverage low, as the current main resistance(R1) stands at 130.70 which is pretty high, but there is one more level at 130.50 (R2)

Refer to link for more info on the trade! http://www.bbc.com/news/business-40520218