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Forex: EUR/JPY demand at 121.60/90 holds; watch all the supply overhead

FXstreet.com (Barcelona) - Having retraced over 50% of its Monday's recovery, the EUR/JPY failed to maintain the upward steeping formation aimed at closing Monday's major gap, and after faced with 124.00, a new wave of selling pressure stepped in. The rate was knocked down sub 122.00 as headlines crossed the wires that Cyprus had rejected the unpopular bank levy.

At present, the pair consolidates losses above the 122.00 handle, but the sense is that it remains quite susceptible to further losses as long as there is no compromise deal over how to save Cyprus from bankruptcy and avoid the loss of confidence towards the Euro leaders as a whole across other peripheral countries.

Technically, in order for more losses to materialize, sellers should overcome area of demand at 121.60/90 - March 18 spike -. If the level gets absorbed, the next cluster of bids to penetrate lies near by down until 121.10/15, as per March 4/5 congestion.

On the upside, supply areas to keep an eye on can be found at 122.40/50 - seen on the 5m chart - followed by the next one near by at 122.55/62 - also observed on the 5m chart -, with clearance of the latter facing next troubling area for buyers at 123.00 - consolidation from the March 19 decline - and ahead of the critical 123.30/70, where very solid selling interest should be noted, as per major imbalance/fall which led to a 150+ pips decline.

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