• EUR/JPY rally stalled around 139.50 and collapsed on ECB’s dovish headlines.
• EUR/JPY Price Analysis: IF it clears 138.00, a fall toward 137.00 is on the cards.

The EUR/JPY reached a two-day high of around 139.61 but plunged due to a news headline crossing wires that stated that European Central Bank (ECB) policymakers could start to consider a slower pace of rate hikes. Therefore, the EUR/JPY plunged toward its daily low of 138.20 before stabilizing at current exchange rates. At the time of writing, the EUR/JPY is trading at 138.30, below its opening price by 0.53%.

EUR/JPY Price Analysis: Technical outlook

The EUR/JPY Tuesday’s pullback courtesy of headlines accelerated the downtrend ahead of the Bank of Japan (BoJ) monetary policy decision. Its daily high fell shy of testing the 200-day Exponential Moving Average (EMA) by 100 pips and plunged to print fresh weekly lows. In addition, oscillators remain in bearish territory, with the Relative Strength Index (RSI) aiming lower, while the Rate of Change (RoC), flashes bears are in control. Hence, the EUR/JPY might resume its downtrend in the near term.

Therefore, the EUR/JPY needs to clear the 138.00 figure, to prolong its downtrend further. Once cleared, the next stop would be the January 3 daily low of 137.38, followed by the 137.00 mark. As an alternate scenario, if the EUR/JPY reclaims 139.00, that would exacerbate a rally toward 140.00.

EUR/JPY Key Technical Levels