EUR/JPY holds above the 23.6% Fibonacci retracement level of the down-leg from 137.50 to 124.60, around 127.65 in the 4-hour chart but lost its strong momentum from yesterday.
From the technical point of view, the momentum indicators are supportive of the short-term neutral mode, with the RSI sloping slightly to the downside below the 50 level and the MACD oscillator holds near zero with weak movement.
If the price moves higher and jumps above the 20-simple moving average in the 4-hour chart, it could hit the 128.80 resistance level. However, should prices climb higher again they would challenge the 38.2% Fibonacci mark of 129.55, which stands near the descending trend line.
In case of a continuation of the medium-term downward movement and a breach of the 23.6% Fibonacci level, price action would likely meet support at the 127.00 handle. Slightly below this level, 126.60 acts as major support. A break below this hurdle as well would drive the pair until the next support of 126.30, taken from the low on May 31.
To sum up, the bearish outlook remains intact in the bigger picture, with the moving averages all pointing downwards in the daily chart and the price holding below the descending trend line since February 1. However, in the short-term, the pair seems to be neutral.
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