EURJPY has formed lower highs and lower lows to trade inside a descending channel on its 1-hour time frame. Price is just bouncing off support and could be in for a correction to the resistance from here.

Using the Fib tool shows that the 61.8% level lines up with the channel top to add to its strength as resistance around 120.20. The 50% level lines up with the dynamic resistance at the moving averages while the 38.2% level is closer to the mid-channel area of interest.

On the subject of moving averages, the 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that resistance is more likely to break than to hold. Then again, the gap between the indicators is narrowing to reflect weaker bullish momentum and a possible bearish crossover. In that case, EURJPY might be able to revisit the swing low at 119.65 soon.

RSI is treading sideways on middle ground to reflect consolidation, but the oscillator has been on the move up. Stochastic is also treading higher but has yet to cross the center line to confirm that buyers are taking control.

The euro suffered some selling pressure late last week when euro zone PMIs disappointed, dashing hopes that the region is pulling up from its slump soon. With that, expectations for additional ECB easing are still in play and could keep the shared currency’s gains in check.

Meanwhile, the yen has been taking advantage of a pickup in risk aversion over the past few days. This has stemmed from global geopolitical risks, including Brexit, trade talks, and protests in Hong Kong. Extending these themes throughout the week could continue to support the lower-yielding currency, although it also has to contend with CPI and retail sales figures from Japan.