- EUR / JPY is doing well defensively near 129.00.
- The strength of the dollar and the yen dragged the cross to multi-month lows.
- The next relevant support is at 128.30.
Buying pressure in the Japanese safe haven coupled with strong dollar demand forces the EUR/JPY to fall further and record new 4-month lows near 129.00.
EURJPY trades near the 200-day SMA
The EUR / JPY intensifies the decline and loses ground for the fourth consecutive week so far this Monday.
In fact, the cross is moving to levels last seen at the end of March near 129.00, all within the broader downtrend that was generated shortly after the annual highs beyond 134.00, a figure recorded in June.
The firm tone over the Japanese safe haven and the dollar amidst persistent risk aversion and falling US yields are helping to drag EUR / JPY lower and open the door to a possible retest of the critical 200-day SMA near 128.30. Below the latter, the outlook for the cross is expected to turn bearish (from constructive).
Meanwhile, investors are expected to gradually lean towards a more cautious mood in light of the ECB meeting scheduled for Thursday. So far, the consensus sees the central bank reiterating or even improving its dovish message, which should put the euro under additional pressure at least in the sessions leading up to the event.
So far, the cross is losing 0.71% to 128.97 and faces immediate support at 128.54 (61.8% of the fibonacci level of the January-June rally) followed by 128.32 (200-day SMA) and then 128.29 (24-month low. of March). On the other hand, an exceedance of 131.08 (weekly maximum on July 13) would point to 132.43 (monthly maximum on July 1) and finally 132.69 (weekly maximum on June 23).