The EUR/JPY pair is coming under heavy downside pressure as the euro currency slumps across the board and the Japanese yen currency stabilises.
EUR/JPY analysis shows that the pair could fall towards the 118.50 level as a bearish pattern on the one-hour time frame plays out to the downside.
EUR/JPY medium-term price trend
Recent weakness in the euro currency has seen the EUR/JPY pair tumbling to a fresh 2020 trading low.
The euro currency’s cross-pairs are also under heavy downside pressure, with the EUR/NZD, EUR/AUD and EUR/GBP pairs all sliding lower this week.
EUR/JPY technical analysis over the medium-term shows that the pair is vulnerable to further losses while trading below the 120.00 level.
It is also noteworthy that the EUR/JPY pair’s 200-day moving average is also located around the 120.00 area, further underscoring the importance of this key technical area.
The daily time frame shows that a bearish rising wedge-pattern breakout has occurred, with the downside projection of the breakout targeting the 116.00 level.
EUR/JPY short-term price trend
EUR/JPY technical analysis over the short term highlights that the pair is increasingly bearish while trading below the 119.78 level.
Price is creating bearish lower highs and lower lows, with trading using any rallies as a selling opportunity.
A bearish head-and-shoulders pattern breakout is currently underway on the lower time frame and is signalling an upcoming drop towards the 118.50 level.
The neckline of the bearish pattern is located around the 119.78 level and remains a key level to watch over the short term.
With the larger trend remaining bearish, sustained weakness below the 119.78 level should signal that the bearish pattern is likely to play out to its full downside potential.
EUR/JPY technical summary
EUR/JPY analysis highlights that the pair is heavily bearish over both the short and medium term. Losses towards either the 118.50 or 116.00 levels seem possible.