• The EUR/JPY remains heavy, extending its losses, also weighed by a falling EUR/USD, which is approaching parity.
• Sentiment is still negative; with Asian equities set to open lower, safe-haven flows will remain bid.
• EUR/JPY sellers stepped in around the 139.00 area and sent the pair sliding as they targeted a move towards the 100-day EMA around 136.00.

The EUR/JPY slumps below the 50-day EMA after last Friday’s buyers attempts to drag the pair above the 139.00 figure, though sellers regained control on Monday, courtesy of downbeat market sentiment sparked by the resurgence of covid-19 in China, as the US inflation data looms.

During Monday’s trading session, the EUR/JPY began trading around 138.50s, surging towards the daily high just above 139.15, tripping down afterward towards the daily low of the day at  137.88. At 137.90, the EUR/JPY stabilized as Tuesday’s Asian session began, almost flat.

EUR/JPY Daily chart

The EUR/JPY is upward biased, despite slipping through the 50-day EMA around 139.05. Nevertheless, oscillators residing in sellers’ territory, and pushing downwards, opens the door for a 100-day EMA test at 136.16. Regardless, the cross-currency might consolidate due to solid support around 137.20-60 and could form a bearish rectangle before aiming lower.

If that scenario plays out and the EUR/JPY breaks below, the first support would be 137.00. The break below would expose the 100-day EMA at 136.16. If that level is cleared, the next support would be the 200-day EMA at around 133.16.

EUR/JPY Key Technical Levels