EURJPY is trending lower on its 4-hour time frame and is currently testing the resistance of its falling channel. If the 124.00 handle holds as resistance, the pair could slide back to support at the 122.00 handle.
The 100 SMA is below the longer-term 200 SMA on the 4-hour chart so the path of least resistance is to the downside. In addition, these moving averages line up with the channel resistance, adding to its strength as a ceiling.
Stochastic is still on the move up, though, so there may be some buying pressure left. In that case, a break past the resistance could lead to a reversal from the ongoing selloff.
There have been no major reports out of the euro zone so far this week as traders are keeping close tabs on Brexit negotiations instead. Looking ahead, the PMI reports from the manufacturing and services sectors of Germany and France are lined up.
Analysts are expecting small dips in activity, which could push the shared currency lower against the safe-haven yen. Japan has its flash manufacturing PMI up for release and a climb from 53.1 to 53.4 is expected.
By Kate Curtis from Trader’s Way