• The EUR/JPY rebounded from 136.29 weekly lows and reclaimed the 137.00 area towards Thursday’s close.
• The cross-currency pair is neutral-to-downward biased, and a break below 136.31 will send the pair sliding towards 135.80.

The EUR/JPY jumps off weekly lows and trims some of Wednesday’s losses amidst a mixed market mood as reflected by the US equities split between gainers/losers towards the end of the session.

Earlier risk appetite improved due to US PPI data, which showed that inflation on the producer’s side is also cooling. So traders asses that the previously-mentioned data, alongside Wednesday’s US CPI, might ease Fed pressures to tackle inflation, meaning a less aggressive tightening

EUR/JPY Price Analysis: Technical outlook

Reviewing Wednesday’s notes, I wrote that a bearish-engulfing candle pattern emerged on the daily chart, which has bearish implications. So Thursday’s price action followed suit and reached a weekly low at 136.29. Nevertheless, as the yen weakened, the EUR/JPY aimed higher, though recorded its daily close below the August 8 daily low at 137,26. Still, the Relative Strength Index (RSI) is in bearish territory, so sellers are in charge, so any rallies could be better entry prices for shorts.

Therefore, the EUR/JPY’s first support would be the August 10 daily low at 136.61. Break below will expose the August 11 pivot low at 136.30, followed by the August 5 daily low at 135.80. On the other hand, If the EUR/JPY clears the 100-day EMA, then a test towards the 138.35 weekly highs is on the cards.

EUR/JPY Daily chart

EUR/JPY Key Technical Levels