EUR/JPY has breached the rising trend line from April lows, what’s next?

EUR/JPY has breached the trend line sloping upwards from the low of 114.85 [April low], thus confirm a bearish trend reversal on the daily chart.

Focus on risk sentiment

As discussed here, the common currency has been treated as growth currency this year. Consequently, bouts of risk aversion like the one witnessed this week are likely to yield EUR weakness. Meanwhile, the Yen remains a favored risk-off currency.

Thus, the cross may extend the losses to 127.41 [23.6% Fib R of Apr-Aug rally] if the risk-off mood remains intact next week.

The German final CPI print for July is unlikely to move the EUR pairs, unless there is a significant upward/downward revision of the preliminary numbers. The data will be released at 06:00 GMT.

EUR/JPY Technical Levels

The pair was last seen trading around 128.30. A break below the previous day’s low of 128.22 could yield 127.41 [23.6% Fib R] and 127.00 [psychological level]. On the higher side, a move above 128.43 [5-DMA] would open doors for a re-test of 129.03 [5-DMA] and 129.50 [trend line hurdle + 10-DMA].