EUR/JPY consolidates losses and moves away from critical resistance
- Euro holds to losses against yen weakened by data.
- Pair heads for lowest close in a week.
The EUR/JPY pair dropped sharply earlier today following the release of Eurozone economic data that came in below expectations, generating concerns about the global growth outlook. It bottomed at 125.66, the lowest level in six days.
From the lows bounced to the upside, but the recovery was limited below 126.00 and during the American session slowly moved back to the lows. As of writing, it trades at 125.75, down 80 pips for the day, having the worst performance since March 22.
Bearish breakout of the range
Today’s slide ended a period of range trading between 126.20 and 126.75/80. The upper limited has become a key resistance that if broken could lead to further gains for the pair above 127.00. In the short-term, the outlook now favors the downside.
If EUR/JPY extends the decline under 125.66 a test of the critical support at 126.50 (uptrend line and horizontal level) could be seen. The mentioned area is likely to offer support today taking into account the low volume session but if it breaks below the negative tone will likely intensify. The next strong support is located around 125.00.