EUR/JPY Just Holding its Neck Above 122.00 Handle
pair erased most of its recovery gains recorded during early half of
the trading week and has now moved back to proximity of the very
important 122.00 handle.
As the focus now turns to today's US NFP data, which if prints a strong number would lead a fresh break-down for the EUR/USD pair and eventually triggering a fresh leg of weakness for the EUR/JPY pair.
Even from technical perspective, the pair has broken below a short-term ascending trend-channel support near 122.50 level. The short-term ascending trend-channel coupled with the pair's sharp fall in the previous week formed a continuation flag chart pattern. A break below the trend-channel indicates that the pair might resume its prior weakening trend. However, it would be prudent to wait for a decisive break below the very important 122.00 handle before confirming extension of the pair's weakening trend.
Technical levels to watch
On a sustained weakness below 122.00 mark, leading to a follow through drop below multi-month lows support near 121.75-70 area tested in April, now seems to accelerate the pair's fall in the near-term towards testing its next major support near 119.00 mark, marking lows tested in March 2013. The 120.00 psychological round figure mark might provide some intermediate support on the downside.
On the upside, the ascending trend-channel support break-point near 122.50-60 area, now seems to act as immediate resistance. This is followed by resistance at 123.00 round figure mark and weekly high level of 123.50-50. Only a decisive move back above weekly highs could possibly negate the bearish outlook and increase prospects of further recovery for the pair in the near-term.