EUR/JPY stays offered and in corrective mode near 123.00

EUR/JPY comes under extra selling pressure on Friday.
The cross drops to 2-day lows just above the 123.00 mark.
Dollar weakness remains the name of the game in markets.

Pablo Piovano FXStreet

After clinching new monthly peaks beyond the 124.00 yardstick on Wednesday/Thursday, EUR/JPY has triggered a move lower which seems to have found contention just above 123,00 the figure.

EUR/JPY looks to risk trends for direction

EUR/JPY is extending further south the recent rejection from levels past the 124.00 mark earlier in the week.

The leg lower in the cross comes despite the persistent bid bias in the European currency, although the sharp sell-off in the greenback appears to be lending extra legs to the demand for the Japanese yen, which in turn keeps EUR/JPY under pressure.

The leg lower also follows some technical correction if we consider the cross was navigating the overbought region in past sessions (as per the daily RSI).

In the docket, flash prints for manufacturing/services PMIs in the core Euroland surprised to the upside, adding to the idea that the recovery post-pandemic could have a more solid base.

In the US, Markit will also publish its flash PMI gauges followed by New Home Sales for the month of June.

EUR/JPY relevant levels

At the moment the cross is losing 0.67% at 123.08 and a drop below 122.87 (monthly high Jan.16) would expose 121.14 (monthly high Mar.25) and then 119.91 (200-day SMA). On the flip side, the next up barrier is located at 124.43 (2020 high Jun.5) followed by 126.80 (monthly high Apr.17 2019) and finally 127.50 (2019 high Mar.1).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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