EUR/JPY is trading in the red and seems poised to take out the near term support levels.  Price extended the bearish movement and now is almost to hit another downside target, where he may find support again. The Yen has dominated the currency market in the yesterday’s trading session as the Nikkei stock index has plunged and resumed the bearish momentum.

EUR/JPY is approaching critical support levels, a breakdown will open the door for more declines in the upcoming period. Technically is somehow expected to drop much deeper in the upcoming period after the failure to make new highs.

The Yen decreased even if the Japanese Average Cash Earnings have disappointed, the indicator dropped by 0.3% in July, despite that the economists have predicted a 0.5% growth. On the other hand, the Euro could receive some support from the Euro-zone data, but only if the figures will impress. The German Factory Orders are expected to increase by 0.2% in July, less versus the 1.0% estimate, while the Italian Retail Sales are expected to drop by 0.2% versus a 0.6% growth in the former reading period. Moreover, the Euro-zone Retail PMI will be released as well.

Price is in a minor corrective phase, after the failure to reach and retest the near term upside targets. It’s almost to reach and retest the inside sliding line (SL) of the major ascending pitchfork, we’ll see how will react.

However, the near term major support is at the 38.2% retracement level, only a valid breakdown below it will confirm a broader drop in the upcoming weeks. Technically is expected to drop further after the failure to reach and retest the sliding line (SL) and the red uptrend line.

The failure to reach the confluence area formed by the mentioned dynamic resistance levels signaled that the price is too exhausted to resume the upside movement. Price opened with a gap down on Monday, showing a high selling pressure on the short term, so the current drop is natural.