- The formation of Double Top amid less buying interest led to a sheer fall in the Euro bulls.
- EUR/JPY is hovering around the critical support at 140.00 and an absence of follow-up buying indicates the Japanese Yen’s strength.
- A bear cross, represented by the 20 and 50-EMAs, adds to the downside filters.
The EUR/JPY pair is displaying back-and-forth moves in a narrow range of 140.00-140.40 in the early Asian session. The cross has turned sideways after a perpendicular downside move amid escalating chatters that the Bank of Japan (BoJ) is aiming to exit from its decade-long ultra-loose monetary policy.
After expanding the range of 10-year Japan Government Bonds (JGBs)’s yields TO +-50 basis points (bps), the BOJ is reviewing the side-effects of easy policy, which indicates that Japanese officials are looking to change their monetary policy approach in parallel with Western nations.
EUR/JPY witnessed a steep fall after failing to extend gains above the horizontal resistance placed from December 28 high around 142.94 amid the absence of sheer buying interest while refreshing a two-week high. This led to the formation of a Double Top chart pattern on an hourly scale, which indicates a bearish reversal.
The asset has dropped to near the demand zone around 140.00 and the unavailability of a follow-up recovery indicates weakness in the Euro bulls.
A bear cross, represented by the 20-and 50-period Exponential Moving Averages (EMAs) at around 142.00, adds to the downside filters.
Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which indicates more weakness ahead.
EUR/JPY may display more weakness if it drops below the crucial support of 140.00, which will drag the asset towards December 20 low at 138.80 followed by January 3 low at 137.39.
On the flip side, a breakout above the Double Top chart pattern around 143.00 will drive the cross towards December 20 high at 145.84. A breach above the latter will expose the asset for more upside towards December 15 high at 146.71.
EUR/JPY hourly chart
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