The lower trend line of the bullish pennant at 131.00 limited the move to the downside

• EUR / JPY is under pressure as central banks delay
• Market sentiment is bullish, except in the currency market, as the yen and the US dollar appreciate.
• EUR / JPY: The lower trend line of a bullish flag triggered a 30 pip jump in the pair.

EUR / JPY is sinking for the day, down 0.83%, trading at 131.28 in the US session at the time of writing. Market sentiment is optimistic, driven by central banks in developed countries pushing higher rates back. On Wednesday, the Federal Reserve announced the long-awaited bond cut, but it was perceived as moderate. In addition, on Thursday, the Bank of England (BoE) reversed its intentions to raise rates as expected by the market, keeping them unchanged, taking some investors by surprise.

That said, global stocks led by US stocks at record highs rebounded. By contrast, in the currency market, risk-sensitive currencies fall, which benefits their safe-haven pairs, such as the dollar and the Japanese yen.

EUR / JPY Price Forecast: Technical Outlook
4 hour chart

The EUR / JPY briefly broke the lower trend line of a bullish flag, but found buyers around 131.00, rebounding to current prices. The 50 and 100 Simple Moving Averages (SMA) are above the spot price, putting downward pressure on the coin. However, the 200 SMA around 130.80 would be a tough hurdle for EUR / JPY sellers to overcome.

However, to keep the EUR / JPY bulls in charge, they need to regain the 50 SMA at 132.10. In that result, the next resistance area would be the 100 SMA at 132.25, followed by the top of a bullish pennant around the 132.60 area. A breach of the latter would expose the October 20 high at 133.47.

On the other hand, the failure at 132.10 would expose a break to the downside of the bull flag around the 131.00 region. In that result, the first support would be the 200 SMA, followed by the October 6 high at 129.49, which was resistance now turned support.

Technical levels