EUR/JPY Attempting a Recovery to 123.00 Level
Global risk-on sentiment seems to assist the EUR/JPY pair to extend its Friday's recovery from April lows and test a previous support now turned resistance near 122.55-60 area.
Moreover, factory orders data from Germany that showed orders rose 1.9% in March, as compared to a fall of 0.8% recorded in February, and kept supporting the pair’s bid tone. The pair, however, seems to face difficulty in building on to its morning gains.
From technical perspective, the pair on Friday broke below a short-term ascending trend-channel support near 122.50-60 zone, which now seems to act as immediate hurdle. The short-term ascending trend-channel when considered in conjunction with the pair's sharp fall from above 126.00 level seems to have formed a continuation flag chart pattern. Hence, any recovery from current levels might be capped and the pair might resume its prior weakening trend.
Technical levels to watch
Up-move from current levels, is likely to confront resistance near 122.90-123.00 round figure mark. Even if the pair manages to clear this immediate hurdle, any further recovery trend now seems to face a strong resistance near 123.20-25 region. Only a decisive strength above this strong resistance might negate the near-term bearish bias and assist the pair to move beyond previous week's high resistance near 123.50-55 area and head towards testing its next major resistance near 124.00 round figure mark.
Meanwhile on the downside, weakness below 122.50 level would confirm fresh supply on every rebound, which would be enough to drag the pair back towards its multi-month lows support near 121.80-70 area. A clear break-through lows held since 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. Psychological round figure mark, 120.00, might provide some intermediate support on the downside.