EUR/JPY Recovers to 123.30 but Remains Vulnerable to Further Downside
The EUR/JPY pair recovered over 65-pips from session low of 122.61 and has now moved to session peak level of 123.24.
The pair on Friday reversed majority of its early week gains but still managed to close with some nominal weekly gains for second consecutive week. On Monday, renewed buying interest at lower levels assisted the pair to climb back above 10-day SMA (123.00 handle).
With most major currency pair's stuck within a narrow trading range, the EUR/JPY pair too is expected to remain muted amid thin volume and lower volatility on the back of European bank holiday in observance of Whit Monday.
From technical perspective, the pair's near-term bias has turned bearish after last week's sharp reversal from 50-day SMA resistance. Moreover, the pair also dropped below 10-day SMA clearly suggesting the pair might is yet to form its near-term bottom.
Technical levels to watch
From current levels, weakness back below 123.00-122.90 round figure mark might continue to find support near 122.65-60 area. A follow-up selling pressure below this immediate support has the potential to drag the pair back towards its recent lows support near 121.70-60 area, earlier tested in April and early May.
On the upside, although the pair seems to build on to its up-move but the momentum might confront immediate resistance around 20-day SMA region near 123.65-70 region. Even if it manages to clear this immediate hurdle, any further momentum might continue to remain capped near 124.00 round figure mark. Only a strong momentum above 124.00 handle, leading to a sustained move above 50-day SMA, might negate the near-term bearish outlook.