EURJPY is trending down as it formed lower highs and lower lows to create a descending channel on its 4-hour chart. Price is testing the resistance and could be due to slide back to the targets marked by the Fib extension tool.

The 38.2% level lines up with the mid-channel area of interest around the 124.50 minor psychological mark and might be a take-profit point for sellers. Stronger selling momentum could drag EURJPY down to the 50% extension at the 124.00 handle or the 61.8% level at 123.60. The 78.6% level is closer to the channel support at 123.00 while the full extension is at 124.40.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This means that selling pressure could still pick up, especially as the 200 SMA is holding as dynamic resistance. Price is above the 100 SMA, though, so there may be a bit of bullish pressure in play.

Stochastic is pointing down to confirm that sellers have the upper hand, and the oscillator has a bit of ground to cover before reaching the oversold region to reflect exhaustion. Turning back up could suggest that buyers are trying to return.

The ECB decision this week could set the tone for euro direction as the central bank is widely expected to reiterate its dovish bias. In their earlier statement, policymakers downgraded economic forecasts and announced the new TLTRO. No additional measures are expected for now but Draghi could be pressed to provide more details on their forward guidance and bank loan facility during the press conference.

Meanwhile, the yen has been on weak footing as risk-taking took hold last week, but the lower-yielding currency could still be ready for gains as geopolitical risks remain. In particular, the Brexit set for April 12 could weigh on traders’ demand for riskier assets.