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  • EUR/JPY dropped to 125.91, hitting the lowest level in four weeks.
  • Key support area under pressure: close under 125.90 would point to sharper correction.

The EUR/JPY continues to correct lower after hitting multi-year highs last week at 127.50. It is hovering around 126.00, testing a critical support area between 126.00 and 125.80.

Technical indicators at the moment favor the downside. Key daily moving averages are turning south and also momentum indicators. EUR/JPY has not yet confirmed the break. Current levels warrant some volatility ahead that includes the possibility of bullish reversals.

A close below 125.80 would target the 124.90/125.00 area and then 124.20. On the upside, a recovery back above 126.50 would keep the cross in the current range, alleviating the bearish pressure. A weekly close above 127.15 would signal a resumption of the dominant bullish trend.

EUR/JPY daily chart