EUR/JPY retreats to 157.00 as bears gain momentum

EUR/JPY undoes daily gains and falls to the 157.00 area after peaking at 157.72.
European Services PMIs from June show disappointing results.
JPY gains interest as the probabilities of a BoJ intervention rise.

Patricio Martín FXStreet

EUR/JPY faced selling pressure, leading to a retreat towards 157.00, erasing earlier gains from its peak at 157.72. Disappointing European Services PMIs for June contributed while the Japanese Yen gained interest as market probabilities of a potential Bank of Japan (BoJ) intervention increase as the USD/JPY approached 145.00.

The Euro faced selling pressure on weak Services PMIs

The recently released PMI data from S&P Global and Hamburg Commercial Bank (HCOB), indicated that French and Spanish Services PMIs for June fell short of expectations, registering at 47.2 and 53.4, respectively. On the other hand, the German and Italian indexes remained unchanged from their preliminary figures, with readings of 54.1 and 52.2, respectively. Overall, the Eurozone's PMIs came in at 52, slightly below the anticipated 52.4, signalling a slight deceleration but still indicating expansion in the sector.

On the other hand, the Bank of Japan’s (BoJ) dovish stance has significantly weakened the Yen in the previous session as economies entered another tightening cycle and higher interest rates tend to be positively correlated with the value of a currency. As a result, the USD/JPY rose to 145.00 psychological level last Friday, yet at the same time, escalating odds of further intervention by the BoJ are likely to support the Yen and may limit its downside potential (placing a ceiling on gains for USD/JPY).

EUR/JPY Levels to watch

From a technical perspective, the bulls have finally thrown in the towel. After showing overbought conditions on the daily chart since mid-June, indicators are finally showing some weakness. The Relative Strength Index (RSI) has fallen below the 70.00 threshold, giving a sell signal, while the Moving Average Convergence Divergence shows decreasing green bars suggesting that the bears may take control.

On the downside, support levels to monitor stand at the 156.70 area, followed by 156.00 and 155.00. On the upside, if the bulls regain momentum, resistance levels are seen at 157.50, followed by 158.00 (cycle-high) and 158.50.

EUR/JPY Daily chart

EUR/JPY

Overview
Today last price	156.99
Today Daily Change	-0.17
Today Daily Change %	-0.11
Today daily open	157.16

Trends
Daily SMA20	154.61
Daily SMA50	151.28
Daily SMA100	147.74
Daily SMA200	145.38

Levels
Previous Daily High	157.92
Previous Daily Low	157.14
Previous Weekly High	158
Previous Weekly Low	155.75
Previous Monthly High	158
Previous Monthly Low	148.62
Daily Fibonacci 38.2%	157.44
Daily Fibonacci 61.8%	157.62
Daily Pivot Point S1	156.89
Daily Pivot Point S2	156.63
Daily Pivot Point S3	156.12
Daily Pivot Point R1	157.67
Daily Pivot Point R2	158.18
Daily Pivot Point R3	158.44

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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