EUR/JPY bears remain in control now eyeing 118.25 24th February low

Currently, EUR/JPY is trading at 119.61, down -0.35% on the day, having posted a daily high at 120.34 and low at 119.32.

EUR/JPY has accelerated the downside from the 122.80 level down to 119.31 the low today with the yen picking up demand across the board. There has been an attempt of the correction and lows. Domestic developments have been limited in Japan and the broader risk-off tone and u-turn in the reflation trade has been the dominating factor in the yen's strength. 

"The recent move has seen JPY trade in tandem with risk reversals in a manner that underscores the current dominance of sentiment," explained analysts at Scotiabank, adding, "JPY is now trading well above levels implied by yield spreads and appears vulnerable to a downward adjustment in the event off a shift in the broader tone."

EUR/JPY levels

"EUR/JPY continues to sell off from its four-month resistance line at 122.72 and also the 2015-2017 downtrend. The market has eroded 120.02 March 8 low and this leaves the 5-month uptrend at 119.44 exposed, which in turn guards the 118.25 24th February low and the 116.92 2016 to 2017 uptrend," suggested analysts at Commerzbank.

Longer term outlook is neutral to positive: 

"Above the 4-month downtrend lies another downtrend at 123.88 and the 124.08 December high. Where are we wrong near term? Above the 4-month resistance line at 122.72. Initial resistance lies at 121.84, the 21st March high," - analysts at Commerzbank.