EURJPY has formed lower highs and higher lows to create a symmetrical triangle pattern on its 4-hour time frame. Price could be due for a downside break of the 122.00 support, which might be followed by a selloff that’s around the same height as the formation.
The moving averages are still oscillating to show that consolidation is still in play. These held as dynamic resistance on the latest bounce, though, so a bit of bearish pressure is present. A drop below the triangle bottom could spur a slide that’s around 250 pips since the pattern spans 121.00 to 123.50.
RSI is already on the move down and has crossed the center line to reflect the presence of a downtrend. Stochastic is also heading south to show that sellers have the upper hand, but the oscillator is closing in on the oversold region to signal that exhaustion might happen soon.
The ECB meeting minutes are up for release in this London trading session and could contain more hints on what the central bank’s next moves might be. Any indication that further easing moves might be in the works could spur a downside break while indications that the ECB is staying neutral could still keep the euro supported.
Meanwhile, there are still expectations that the BOJ could ease monetary policy, especially since officials have dropped some hints and recent economic reports have been weaker than expected.
Another factor that could weigh on the yen might be major shifts in market sentiment and dollar direction. The FOMC minutes and Fed head Powell’s speech might push the dollar in a particular direction, thereby influencing where the yen might be moving as well. Indications of more rate cuts in the works could dampen demand for the safe-haven yen as it would spur stronger risk appetite.