EURJPY broke below support around the 120.50 minor psychological mark recently and dipped to a low of 118.46 before pulling back up. Price has since retreated to the 61.8% level around 121.20 and could be due to resume the slide.

The 100 SMA is still below the 200 SMA to confirm that the path of least resistance is to the downside of that the selloff is more likely to resume than to reverse. The 200 SMA is also holding as dynamic resistance and could continue to keep gains in check.

RSI is turning lower to show that selling pressure is returning and could be enough to drag EURJPY back to the swing low. Stochastic is also turning south from the overbought region to show that bears are taking over while bulls take a break.

There’s not much in the way of major reports from the euro zone economy this week, save for the German Ifo business climate index and preliminary CPI. As for the yen, there are no economic releases due so risk sentiment could be the main driver of price action.

Over the weekend, the rising number of coronavirus cases outside Japan has brought risk aversion back in the markets. So far, the contagion has been higher in Italy, South Korea, and Iran so traders can’t help but worry that worse figures could be reported soon.

On the other hand, easing concerns throughout the week, perhaps on the slowing increase in China or progress in keeping the situation contained, could bring risk appetite back. If so, this might lead to a selloff for the safe-haven yen, although the euro’s gains are still likely to be limited. After all, the shared currency also tends to act as safe-haven in some market scenarios.