EURJPY entered a downhill race following the peak at a four-month high of 133.47 in the four-hour chart, correcting below its shorter-term simple moving averages (SMA) and more recently below the Ichimoku cloud, which kept the bears under control on Wednesday.
The downturn in the RSI and the MACD is gaining fresh momentum in the bearish territory as the Stochastics are drifting lower again despite their latest bounce off the oversold area, all flagging additional losses ahead for the market.
The 38.2% Fibonacci of the 127.92 – 133.47 upleg at 131.35 is the nearest support zone for an upside correction, but the lower line of the descending channel seen at 131.00 could immediately guarantee a halt in declines. If the latter fails to act, the sell-off could sharpen towards the key restrictive region formed between the 50% Fibonacci of 130.70 and the 130.50 level. Another failure here would snap the upward pattern, switching the outlook in the broad picture back to neutral.
On the upside, a forceful move above the channel and the 23.6% Fibonacci of 132.16 would shift the bias back to positive, likely raising buying orders up to the 132.60 resistance. If upside pressures further intensify, the pair will probably take a rest near last week’s limitations around 133.20 before crawling to the top of 133.47.
In brief, EURJPY is holding a bearish bias in the very short-term picture ahead of today’s ECB policy meeting. The next turning point is expected to develop within the 131.35 – 132.00 zone.