EUR/JPY extends its downward trajectory largely as the shared currency remains heavily offered versus the Japanese yen during the European session on looming Greece debt concerns. While a weaker yen versus the greenback cushions the losses in the cross. The US dollar index which measures the relative performance of the greenback against six major currencies, remains boosted and trades at 98.51, recording 0.36% gain on the day. At the moment, EUR/JPY trades lower by -0.17% at 127.79 levels, moving away from session lows posted at 127.46 levels in early European trades.

EURJPY

Technically, on the daily chart, EUR/JPY continues to trade in a short-term downtrend channel, with cross finding good support at 126 levels. On the same chart, the cross remains below all its moving averages indicating persistent underlying weakness. Moreover, the pair broke below the crucial 10-DMA located at 127.70, which triggered a fresh sell-off, knocking-off EUR/JPY to session lows at 127.46. Currently, the cross continues to trade around the 10-DMA support-turned resistance indicating more room for declines. The daily RSI at sub 40 remains in the bear range and aims lower, also supporting the case for further downside in the making.

Adding to this, Valeria Bednarik, Chief Analyst at FXStreet explained, "In the 4 hours chart the price remained below its moving averages that maintain strong bearish slopes, whilst the technical indicators head lower towards their mid-lines, suggesting some additional declines on a break below the mentioned 127.70 level."

Hence, with above technical factors at play, it appears that the EUR/JPY cross is headed for a retest of a critical support located at 126 levels within a week.

On the macroeconomic front, amid underlying broad based US strength; we anticipate the shared currency to underperform the Japanese yen in the week ahead against a back drop of impending Greece debt woes. Moreover, uncertainties surrounding Greece concerns continue to pull the euro down, with the pressure rising as Friday’s Euro group meeting approaches.

The Greek crisis has worsened with default risks rising unless bailout funds are made available very soon. Greece may be in imminent danger of running out of cash. The Greek government has now requested that local municipalities to transfer cash to the central bank.

The latest development around Greece appears that the ECB is contemplating curbs on Greek bank support if Greece reforms progress is absent. ECB is studying measures to increase haircuts for Greek banks accessing Emergency Liquidity Assistance (ELA) and may roll out 3 options to reduce central bank risks.

Greek Prime Minister Alexis Tsipras is expected to present detailed reforms plan before a meeting of euro zone finance ministers in Riga on April 24 to prevent a default which could trigger a Grexit. The next regular Euro group meeting is on May 11, just a day before the IMF requires a EUR 750 million loan repayment. It’s widely anticipated that a closure on the reforms plan is unlikely to be reached until May 11 meeting.

On the JPY side of the story, the Japanese yen continues to move within a 250 pips range against its US counterpart over the past month and the range trade is expected to continue in the week ahead with 120.50 posing as a strong resistance and 118.50 as a major support.

To conclude, Greece crisis is likely to be the dominating theme in the week ahead with the shared currency expected to remain pressured across the board. This may support the case for EUR/JPY to retest of 126 levels in the near term. The pair is likely to find a good support at 126.80, below which EUR bears may take over, driving EUR/JPY to 126 handle. However, a failure to breach 126.80 levels, the pair may rebound to 128.70 resistance zone.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD: Further losses retarget the 200-day SMA

AUD/USD: Further losses retarget the 200-day SMA

Further gains in the greenback and a bearish performance of the commodity complex bolstered the continuation of the selling pressure in AUD/USD, which this time revisited three-day lows near 0.6560.

AUD/USD News

EUR/USD: Further weakness remains on the cards

EUR/USD: Further weakness remains on the cards

EUR/USD added to Tuesday’s pullback and retested the 1.0730 region on the back of the persistent recovery in the Greenback, always against the backdrop of the resurgence of the Fed-ECB monetary policy divergence.

EUR/USD News

Gold flirts with $2,320 as USD demand losses steam

Gold flirts with $2,320 as USD demand losses steam

Gold struggles to make a decisive move in either direction and moves sideways in a narrow channel above $2,300. The benchmark 10-year US Treasury bond yield clings to modest gains near 4.5% and limits XAU/USD's upside.

Gold News

Bitcoin price dips to $61K range, encourages buying spree among BTC fish, dolphins and sharks

Bitcoin price dips to $61K range, encourages buying spree among BTC fish, dolphins and sharks

Bitcoin (BTC) price is chopping downwards on the one-day time frame, while the outlook seen in the one-week period is a horizontal trade. In this shakeout moment, data shows that large holders are using the correction to buy up BTC.

Read more

Navigating the future of precious metals

Navigating the future of precious metals

In a recent episode of the Vancouver Resource Investment Conference podcast, hosted by Jesse Day, guests Stefan Gleason and JP Cortez shared their expert analysis on the dynamics of the gold and silver markets and discussed legislative efforts to promote these metals as sound money in the United States.

Read more

Majors

Cryptocurrencies

Signatures