The euro has come under some pressure against the yen so far this week, culminating in the early hours of this morning in the neckline of a head and shoulders being broken and the pair taking another tumble.
The conservative price projection following the break – second shoulder to the neckline, projected below it – was achieved around the European open. The more aggressive projection – head to the neckline, projected lower – came close to being hit in the last hour but caught a bid slightly ahead.
With this move effectively complete now, the next hurdle for the pair is whether it can break back below 125.00. Having already rebounded off the 50 fib level – 29 January highs to 1 March lows – and prior support, a break below 125.00 would further suggest the pair is potentially on course for much broader declines, with 1 March lows offering the next major test.
It could find some support along the way around 123.65 and 123.00 with both having recently been notable support levels.
Alternatively, if we see the pair rotate back to the upside off the current 125.00 support level, it may suggest that either the correction still has some way to run or that the pair has bottomed out for now.