EUR/JPY Price Analysis: Struggles around 137.00, as a head-and-shoulders formation looms

The EUR/JPY grinds lower during the North American session on Friday, though it looks forward to printing two consecutive monthly gains, up 1.64% as the month-weekly end looms. At the time of writing, the EUR/JPY is falling some 0.31%, trading at 136.80.

A risk-off market mood suddenly shifted appetite in the FX space. Except for the greenback, safe-haven peers are the leaders in the North American session. Risk appetite is weighed by concerns about China’s coronavirus outbreak which threatens to disrupt supply chains, Russia-Ukraine tussles continued, and a Federal Reserve aggressive tightening added a pinch of salt to a dismal sentiment.

During the overnight session, the EUR/JPY opened around 137.50 and meandered around the 200-hour simple moving average (SMA), almost horizontal, around 137.70. However, once European traders got off their desks, the US session’s sour sentiment weighed on the EUR/JPY, dragging the pair towards new daily lows around 136.50.

EUR/JPY Price Forecast: Technical outlook

The EUR/JPY daily chart depicts the pair as upward biased, though it in the last couple of days was unable to break resistance at 138.00, courtesy of EUR weakness. Also, a head-and-shoulders pattern is forming, which would add downward pressure on the pair, though a break below the neckline is needed to validate the pattern.

If that scenario plays out, the EUR/JPY first support would be 136.00. Break below would drag the pair towards the head-and-shoulders necklines, around 134.70-135.00. Once broken, the next stop would be last year’s high, around 134.12, followed by some DMAs before reaching the 130.00 head-and-shoulders targets.