- The EUR/JPY daily chart forms a bearish candlestick pattern with bearish implications.
- In the short term, the EUR/JPY could provide momentum before extending the downtrend.
The EUR/JPY slumped on Wednesday as risk momentum spurred on by lower US inflation data, dispelling the Federal Reserve’s need for aggressive tightening. The reaction was that the US 10-year bond yield fell, dragging USD/JPY down. Therefore, EUR/JPY followed suit, falling more than 100 pips to its daily low at 136.94. At the time of writing, the EUR/JPY is trading at 136.86, down 0.81%.
EUR/JPY Price Analysis: Technical Outlook
From a daily chart perspective, the EUR/JPY is forming a bearish candlestick pattern, which means that the sellers have outperformed the buyers. Furthermore, the currency has broken below the 100 day EMA at 138.03 and at the time of writing it is testing the 4th August high at 136.92, previous resistance turned support. If the latter breaks, sellers will remain in command, paving the way for further losses.
EUR/JPY daily chart
In the short term, the hourly chart of the EUR/JPY illustrates the pair as neutral to the upside, but the pair’s drop below the weekly opening price of 137.32 could pave the way for further losses. The downtrend appears to be losing steam as the Relative Strength Index (RSI) entered an oversold condition, meaning EUR/JPY could gain momentum towards the 50% Fibonacci retracement at 137.50 before trending again bass guitarist.
If the above scenario holds, the first support for the EUR/JPY would be the 137.00 figure. Once broken through, the next support level will be the 10th Aug low at 136.61, followed by the 200 hourly EMA at 136.44, before turning down to the key psychological level at 136.00.
EUR/JPY hourly chart
Key technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
