EUR/JPY Price Analysis: Eroding support at 120.25 area
- EUR/JPY extends losses on risk aversion, to test 120.25 support.
- The yen rallied on fears of a second COVID-19 wave and geopolitical tensions.
- The euro has attempted a mild rebound although it remains far from day highs.
The euro has gone further south against the Japanese yen on Wednesday, extending its reversal from 122.14 lows to test a key support area at 120.25. Market concerns about the increase of coronavirus infections in the US and China and the growing geopolitical tensions in Asia have triggered a rush to safety that has strengthened safe havens like the yen.
Against this backdrop, the euro has depreciated about 1% over the last two days and is now hovering at 120.40 area, right above an important support level at 120.25 (June 12 low). Below here, bearish pressure on the euro might increase, leading the pair towards 119.43 (50% Fibonacci retracement of the May – June rally, and 118.50 (May 28 low, May 21 high)
The moderate improvement on market sentiment, with US equities indexes in green, has given some support to the pair although it still remains well below day highs. On the upside, immediate resistance lies at 121.24 (intra-day high), before June 16 high at 122.13, which is closing the path towards June‘s peak at 124.40.
EUR/JPY 4-hour chart
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EUR/JPY key levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
