EUR/JPY hits fresh 1-week lows and rebounds

Matías Salord FXStreet

EUR/JPY is falling on Thursday on the back of a stronger Japanese yen amid a decline in stock markets. In the US, the Dow Jones is falling 0.78% with the index below the 18,000 line for the first time in four weeks.

The pair weakened sharply during the Asian session amid risk aversion and bottomed after the beginning of the American session at 113.91, the lowest since October 4. Then it quickly climbed back above 114.00 and it rose further. It was trading at 114.30/35, 50 pips below yesterday’s closing price but moving off daily lows.

The test of 114.00 continues

The yen was rejected, like Tuesday and Wednesday, from below the 114.00 zone, that continues to offer a strong resistance. A consolidation below could open the doors for an extension of the decline. Support then could be seen around the 113.50 area followed by the 112.00 handle (Sep lows).

To the upside, the pair needs to regain the 115.00 zone to remove bearish momentum. For a medium-term recovery, the euro needs to break the barrier around 116.00: a consolidation above would put the price at monthly highs and clear the way toward a possible rally to 117.00.

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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