EURJPY is heading lower over the last three weeks, following the pullback from the more than a 2-year high of 137.50. Prices managed to bounce up to the 133.00 handle on Wednesday but soon stepped back, falling to a fresh 3-month low of 131.22. The bearish picture in the short-term is further supported by the technical indicators.

Looking at the 4-hour chart, momentum indicators are also pointing to a continuation of the bearish bias. The stochastic oscillator posted a bearish crossover within its moving averages, while the MACD oscillator is still holding in the negative territory and is falling below its trigger line.

If the market continues the sell-off, a drop below the significant barrier of 131.20, which has been tested several times in the past, could shift focus to the 129.30 support level, taken from the low on September 6. A fall below the latter level could open the way towards the 127.45 barrier in the medium-term.

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Conversely, in case of an upward correction of the aggressive bearish move, the price could re-challenge the 23.6% Fibonacci retracement level of 132.70. A break above the aforementioned obstacle could see a re-test of the 133.00 psychological level.

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