• The EUR/JPY remains heavy in the week, down 0.25%.
• Sentiment remains negative, meaning that the EUR/JPY might be under selling pressure.
• EUR/JPY is neutral-bearish, and a break below 138.00 might send the pair towards 136.00.

The EUR/JPY is almost flat as the Asian Pacific session begins, though on Wednesday finished on a higher note, gaining 0.57% despite a dampened market sentiment spurred by hot US inflation at 41-year highs, Fed stakes of hiking 100 bps elevated, and consequently, a possible recession due to restrictive monetary policy worldwide. At the time of writing, the EUR/JPY is trading at 138.13, slightly up 0.09%.

EUR/JPY’s Wednesday price action illustrates the cross-currency beginning trading around 137.30s, consolidating around the 137.30s-75 area before European traders got to their offices. At that time, the pair seesawed between 137.22-137.96 on mixed EU economic data but rallied in tandem with the EUR/USD. Once the latter tumbled below parity and quickly recovered, it rallied towards daily highs above 1.0100. So, the EUR/JPY followed suit and reached a Wednesday’s high at 138.79, and once the dust settled down, the cross dived towards the 138.10s area.

EUR/JPY Daily chart

From a technical analysis perspective, the EUR/JPY is neutral. On the upside, it has the 20 and 50-day EMAs, but on the downside, the 100 and 200-day EMAs. Oscillators, led by the Relative Strength Index (RSI), are in bearish territory, tilting the pair slightly to the downside and further cementing that, is EUR/JPY buyers’ failure to conquer the 50-day EMA at 139.07, exposing the pair to selling pressure.

Therefore, the EUR/JPY first support would be the 138.00 figure. Once cleared, the next support would be the confluence of the July 6 and July 12 swing lows around the 136.85-137.01 area, followed by a challenge to the 100-day EMA at 136.33.

EUR/JPY Key Technical Levels