EURJPY – Is the Downtrend Set to Continue?

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.

EURJPY Daily

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.

FX5: Central Banks Doing The Business

It could find some support along the way around 123.65 and 123.00 with both having recently been notable support levels.

EURJPY 4hr

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.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.