Though the pair has recovered from its earlier session lows in the 128.20s back to the 128.75 area in more recent trade, and thus eroded the day’s losses to a mere 0.25% from as much as 0.6%, EUR/JPY’s negative bias continues. Indeed, EUR/JPY’s lows on Tuesday was a fresh more than one-month low and mark a sixth successive session where the pair has printed a lower low. After Monday’s more overtly defensive bias to FX market trade that saw the yen and euro alike perform well, the euro was an underperformer during Tuesday’s more mixed session.

That underperformance comes despite better-than-expected German Ifo figures released in the European morning, which as analysts have pointed out, was perhaps negated by pessimistic economic commentary from the economic institute.

BULLISH AND BEARISH ENTRIES/ TARGET DESTINATIONS :

 From a technical perspective, the fact that EUR/JPY hasn’t yet been able to muster a recovery back towards prior support now resistance in the 129.50 area, or back to test its 50-day moving average since dropping below it, is a bearish sign.

Even so, the cross-currency pair remains on the bear’s radar as it fails to extend the previous day’s corrective pullback from monthly low, also comprising the 61.8% Fibonacci retracement (Fibo.)level of January-May 2021 upside, near 128.50.

Also favoring the EUR/JPY bears is the quote’s sustained trading below 50-DMA level of 129.35 amid bearish MACD and downbeat RSI, not oversold.

That said, lows marked during August and September months during the last year, around 127.90, will act as an extra filter to the south before directing the quote towards a one-year-old support line, near 127.75.

Meanwhile, a clear upside break of 129.35 will propel the quote towards breaking the 130.00 threshold. However, 38.2% Fibo. level surrounding 130.70 becomes crucial to watch for further upside moves.

Overall, EUR/JPY prices are likely to extend declines from early January even if the seller’s journey will be a bumpy one.

EURJPY Biased to the Bullish Side Above 128.20

Jan 26 2022