A combination of a decline in bond yields and a modest decline in equity prices around the globe favored the yen. EUR/JPY failed to hold to gains and turned negative. Now the pair is headed toward the second daily decline in a row.
Earlier today, a stronger euro pushed the pair to 121.40. But then it started to move to the downside. During the American session, it fell below last week lows and bottomed at 120.70. Near the end of the day, it was trading at 120.80/85, 20 pips below Friday’s closing price.
EUR/JPY continues to decline after hitting exactly a week ago at 122.88, the highest level in a month.
Valeria Bednarik, Chief Analyst at FXStreet, point out that today’s recovery stopped at the 23.6% retracement of the November/December rally and also where the 100-day moving average stands. “The pair is pressuring a modestly bullish 100 DMA in the daily chart, while the 20 SMA maintains a sharp bearish slope above the current level, and technical indicators resumed their declines after correcting up to their mid-lines at the beginning of the day, all of which maintains the risk towards the downside.”
The pair has an immediate support at 120.60 and a break below it would likely open doors for a continued decline towards the 119.70 region, added Bednarik.