EURJPY continues to trade in its 3-month range but in the short-term, the bias is bearish after the pair failed to break out of the top of the range at 134.50. There is limited upside in the near term and risk remains tilted to the downside as the RSI is bearish.
Looking at the 4-hour chart, the market became overextended before reversing, as indicated by the RSI reaching over 70. The drop from 134.47 resulted in falling below the 20 and 50-period moving averages into the 132 handle. Prices have stabilized near 132.50 but with a bearish RSI, the odds are high for continued downside momentum.
A daily close below 132.50 would yield significant additional weakness to set EURJPY on the path towards 131.50. Breaking the base of the medium-term range and below 131 would shift the longer-term trend to a more bearish one.
In the short term, a deeper pullback towards 132.50 is possible while RSI is bearish and the 20-period MA is falling. The medium-term range is expected to remain intact between 131.50-134.50.