EUR/JPY Price Analysis: Dives sharply below 137.00 as risk appetite improves

EUR/JPY daily chart forms a bearish-engulfing candle pattern with bearish implications.
In the short-term, the EUR/JPY might print a leg-up before extending the downtrend.

Christian Borjon Valencia FXStreet

The EUR/JPY plunged on Wednesday due to a risk-on impulse spurred by US inflation data, which ticked lower, dissipating the Federal Reserve’s need for an aggressive tightening. The reaction was that the US 10-year bond yield retraced, dragging the USD/JPY. Hence, the EUR/JPY followed suit, diving more than 100 pips towards its daily low at 136.94. At the time of writing, the EUR/JPY is trading at 136.86, down 0.81%.

EUR/JPY Price Analysis: Technical outlook

From a daily chart perspective, the EUR/JPY is forming a bearish-engulfing candle pattern, meaning that sellers outweighed buyers. Additionally, the cross-currency tumbled below the 100-day EMA at 138.03 and, at the time of writing, is testing the August 4 high at 136.92, previous resistance-turned-support. If the latter is broken, that will keep sellers in the driver’s seat, paving the way for further losses.

EUR/JPY Daily chart

Short-term, the EUR/JPY hourly chart, illustrates the pair as neutral-upwards, but prices falling below the weekly opening price of 137.32, might pave the way for further losses. The downtrend seems to lose steam as the Relative Strength Index (RSI) entered oversold conditions, which means that the EUR/JPY might print a leg-up towards the 50% Fibonacci retracement at 137.50 before resuming the downtrend.

If the above scenario plays out, the EUR/JPY first support would be the 137.00 figure. Once cleared, the next support level will be the August 10 low at 136.61, followed by the 200-hour EMA at 136.44, before sliding to the psychological 136.00 figure.

EUR/JPY Hourly chart

EUR/JPY Key Technical Levels

EUR/JPY

Overview
Today last price	136.89
Today Daily Change	-1.00
Today Daily Change %	-0.73
Today daily open	137.89

Trends
Daily SMA20	138.23
Daily SMA50	139.89
Daily SMA100	138.04
Daily SMA200	133.85

Levels
Previous Daily High	138.32
Previous Daily Low	137.26
Previous Weekly High	137.76
Previous Weekly Low	133.4
Previous Monthly High	142.43
Previous Monthly Low	135.55
Daily Fibonacci 38.2%	137.91
Daily Fibonacci 61.8%	137.67
Daily Pivot Point S1	137.33
Daily Pivot Point S2	136.77
Daily Pivot Point S3	136.28
Daily Pivot Point R1	138.38
Daily Pivot Point R2	138.87
Daily Pivot Point R3	139.43

Author

Christian Borjon Valencia

FXStreet

Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.