EUR/JPY steadied on Wednesday after an aggressive bearish rally in the previous six days. The common currency created an eleven-month low of 124.60 against the Japanese yen on Tuesday, while the price is paring some of the losses over the last couple of hours. The momentum indicators are supportive of the slightly bullish correction.
In the 4-hour chart, the RSI indicator is rising in negative territory and is approaching the threshold of 50. Moreover, the MACD oscillator is moving marginally higher after a strong negative momentum in the previous days.
In case of a further upward attempt, EUR/JPY would likely meet resistance at the 20-day simple moving average (SMA), currently around 126.85. A break above the 20-day SMA would ease the downside pressure and bring the pair within reach of the 40-day SMA at 128.30. Slightly above this area, prices could hit the 128.50 resistance barrier.
On the flip side, immediate support is being provided by the eleven-month low of 124.60. However, should prices dip lower again, the next support would likely come from the 123.70 level, identified by the June 2017 low.
In the medium term, the bearish outlook remains intact since February 2, with the moving averages all pointing downwards.
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