EUR/JPY analysis: bearish momentum increases, 120.00 at sight
EUR/JPY Current price: 121.01
The Japanese yen surged in a risk-averse environment, resulting in the EUR/JPY pair falling to its lowest since early December, 120.74, before settling around the 121.00 level. Data coming from Japan overnight was mixed, with December Domestic Corporate Goods price index up by 0.6% monthly basis, beating expectations of a 0.3% advance, while the YoY reading resulted at -1.2%, well above previous -2.2%, although machinery orders plummeted by 5.1%, when compared to the previous month. The pair is now at risk of falling further, as it broke below the 23.6% retracement of the 112.89/124.09 rally at 121.40, the immediate resistance. Short term, the 1 hour chart shows that the price has been confined to a well-limited range for most of the last two sessions, letting technical indicators correct the extreme oversold conditions reached at the beginning of the day, although they remain within bearish territory, whilst the 100 and 200 SMAs head sharply lower above the current level, all of which maintains the upside limited. In the 4 hours chart, the 100 and 200 SMAs are coming together around 122.20, whilst technical indicators lack certain directional strength, but remain well below their mid-lines, indicating that the risk remains towards the downside.
Support levels: 120.75 120.40 120.10
Resistance levels: 121.40 121.90 122.30
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
