EUR/JPY Price Analysis: Sold-off at key $126.80 rising trendline hurdle
- EUR/JPY drops sharply after rejection at higher levels.
- 21-HMA at $125.96 to offer some respite to the buyers.
- Risk-off mood seeps back as Japan PM Abe set to resign.
EUR/JPY witnessed a steep drop of nearly 70-pips in the last hour, mainly on reports that the Japanese Prime Minister Shinzo Abe is set to resign from his position due to worsening health conditions.
The Abe news triggered a fresh risk-aversion wave and downed the Japanese equities, lifting the safe-haven appeal of the yen. The benchmark Nikkei 225 index closed 1.40% lower while USD/JPY nursed losses around 106.30 region after the U-turn from just shy of the 107 mark.
From a short-term technical perspective, the sell-off in the EUR/JPY cross was sparked after it faced rejection at the rising trendline resistance of $126.78.
The spot fell as low as $126.03 before swiftly recovering to near $126.20 region, where it now wavers. Despite the declines, the pair managed to hold above the critical 21-hourly Simple Moving Average (HMA), now at $125.96.
A break below the latter will open floors towards the next support at $125.66, the horizontal 50-HMA. Acceptance below that level will challenge the confluence of the 100 and 200-HMAs at $125.50.
Meanwhile, any recoveries will meet fresh supply near $126.50, the psychological level. Buyers will then aim for a retest of the above-mentioned rising trendline resistance.
The hourly Relative Strength Index has turned flat but holds above the midline, suggesting that a bounce cannot be ruled out.
EUR/JPY: Hourly chart
EUR/JPY: Additional levels
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
