EUR/JPY hits 3-week lows and rebounds to the key 130.00 area

EUR/JPY drops sharply but recovers key level.
Yen gains on risk aversion triggered by trade war fears.

Matías Salord FXStreet

The EUR/JPY pair tested today again the 131.00 region but failed to break and dropped sharply. It bottomed during the US session at 129.48, the lowest since March 5 and then rebounded back to the 130.00 area. Price continues to move sideways near a critical support.

The slide of the pair was triggered by a rally of the yen. The Japanese currency soared on the back of risk aversion. US President Trump announced a plan to impose tariffs on Chinese imports, reviving trade war fears. The DOW JONES was losing 1.67% and the NASDAQ was down 1.37%.

Technical levels

The bias continues to point to the downside as EUR/JPY remains unable to recover the 131.00 area. The downside remains limited below 130.00. A daily close well above 131.00 is likely to add momentum to the euro while if the close takes place below 130.00, a decline to the lowest level since August seems likely.

Below 130.00 support levels might lie at 129.60 (Mar 19 low), 129.30 (Mar 5 low) and 129.00. On the upside, immediate resistance could be seen at 130.25/30 (US session high) followed by the 20-day moving average at 131.00 and 131.30.

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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