The EURJPY currency pair has been at the mercy of bears, who sold off the pair for seven straight days, bringing it down 2.26% from its year-to-date peak. 

The Yen recently found favour due to rising Japanese government bond yields, along with a weaker Greenback. On the other hand, the Euro experienced headwinds from weakening manufacturing and services activity which fell below expectations, reminding the market of the ongoing recession in the Euro Area. The Euro is also challenged by low investor confidence in the region, which declined more than anticipated in July and hit a low not seen since Europe’s energy crisis last November. 

Technical 

The EURJPY currency pair has been in a clear uptrend, fleeing from its 100-day moving average with conviction. The pair has traded in an ascending channel pattern, bouncing between the channel’s dynamic support and resistance. The rejection of the upper trendline at the 157.902 level formed a resistance level, where bears piled in to take the pair lower.  

Currently, the pair trades at the ascending channel’s support which coincides with the 50% Fibonacci Retracement level of 153.265. If bulls attempt to recommence the uptrend, a rejection of the 153.265 level could see price action navigate toward resistance at 157.902. 

In contrast, if bears outmanoeuvre bulls out of the ascending channel pattern to the downside, the next level of interest could be the 61.80% Fibonacci Retracement Golden Ratio, where bulls could be lurking.  

Summary 

Given the recent advancement of German inflation, the Euro could be reinforced by expectations of higher rates for longer. If the Yen loses its footing, the 157.902 level could be retested, whereas the 152.170 Golden Ratio could be the next point of interest if downside pressures persist.  

Sources: Reuters, TradingView