EURJPY previously broke below a rising trend line support on the 4-hour time frame and might be due for a correction soon. Price is already nearing the previous lows at 122.00 and sellers might be waiting for a pullback to enter at a better price before pushing for new lows.
Using the Fib tool on the latest swing high and low shows that the 38.2% level is near 125.00, the 50% level is near 125.50, and the 61.8% level is near 126.00. Any of these psychological levels could hold as near-term resistance, allowing the selloff to resume.
The 100 SMA is still above the 200 SMA so the path of least resistance is to the upside for now. In addition, stochastic is climbing out of the oversold territory so buyers may be taking the upper hand.
Japanese government officials have been reiterating that they’re closing watching the yen’s forex levels and could intervene in the forex market if necessary. However, traders don’t seem to believe these threats and have even pushed the yen higher as risk aversion has been in play.
Meanwhile, the euro got hit by dovish remarks in the ECB minutes, which revealed that policymakers actually discussed a much larger easing expansion in their March statement. ECB Governor Draghi reminded markets that they are ready to do whatever it takes to boost growth and inflation.
Only medium-tier reports are up for release from the euro zone today, leaving market sentiment in play. There are also no major reports from Japan but additional jawboning could spur volatility for yen pairs.
By Kate Curtis from Trader’s Way