EUR/JPY: Bulls capped at key resistance, consolidates below 200-hour moving average

EUR/JPY is trading a 121.37 in a tight range of between 121.22 and 121.38, below the 200-hour moving average, consolidating at a confluence resistance area. 

The euro was bid overnight, tracking down the 1.12 handle following European data and mixed sentiment surrounding the US/Ira threat. Firstly, the Eurozone final December services PMI (52.8) beat the flash release (52.4). "Reflecting the less weak national releases, Markit’s Eurozone composite PMI rose further from the contraction point with a reading of 50.9 for Dec. (flash 50.6)," analysts at Westpac. 
Meanwhile, the yen has been picking up a bid on risk-off themes, the latest being the conflict between the US and Iran and a war of words following the assassination of one of Iran's top generals. 

Iran said would no longer observe limitations on its capacity for enrichment

Since the Asian open at the start of the week, US President Donald Trump was tweeting again, saying that “Iran will never have a nuclear weapon”. This followed the news that Iran would abandon the accord over the weekend. In a statement, Iran said it would no longer observe limitations on its capacity for enrichment, the level of enrichment, the stock of enriched material, or research and development which has been stoking the flames of war, antagonising a very fragile and hostile situation. 

EUR/JPY levels

The cross has met a key resistance and now consolidates below 200-hour moving average. "EUR/JPY sold off last week to its 4-month uptrend, having failed for the past four weeks at Fibonacci resistance at 122.63," analysts at Commerzbank explained:

This is the 61.8% retracement of the move down from the April 2019 peak. While capped by 122.65 (December 2019 high), we will assume a negative bias is entrenched.

The 4-month uptrend (120.40) is being eroded leaving attention on the 119.26 mid-November low. Failure here would be considered to be negative and this will target the 115.87 September low (favoured).