EUR/JPY Price Analysis: Seesaws around the 50-DMA as volatility shrank, the rising-wedge stills in play

• The EUR/JPY rally continues, albeit retracing from weekly highs, gaining 0.82% in the week,
• A risk-on market mood weighed on the common currency and lifted the JPY.
• EUR/JPY Price Forecast: Rising wedge in the daily chart might lead the pair to tumble towards 132.00 unless EUR/JPY bulls reclaim 137.00.

The shared currency slides for the second consecutive day against the Japanese yen, despite recent ECB policymaker’s “hawkish” commentary and a risk-on market mood that usually weighs on the yen. At the time of writing, the EUR/JPY is trading at 136.04, posting minimal gains of 0.13% as the Asian session starts.

On Thursday, sentiment is positive as global equities rally. Asian equity futures depict a higher open in Asian markets once the US FOMC May meeting minutes reiterated what Fed policymakers said after May 5. Investors’ shrugged off China’s coronavirus crisis, which spurred factory halts in April, mainly in Shanghai.

On Wednesday, the EUR/JPY pair opened near the daily high and plunged, despite a risk-on market mood, aiming towards the 200-hour simple moving average (SMA) at 135.32, breaking on its way south, support levels like the 50-hour SMA at 136.07, and the 100-hour SMA at 135.60. However, the cross-currency is back above Thursday’s central daily pivot point, up by some 0.11%.

EUR/JPY Price Forecast: Technical outlook

The EUR/JPY daily chart depicts the pair as upward biased. However, the cross advances steadily and will face a solid supply area around the 137.00 mark, which EUR/JPY bulls have been unable to conquer.

It’s worth noting that a rising wedge formed, which, once broken, might open the door for further losses. That said, the EUR/JPY’s first support would be the 50-day moving average (DMA) at 135.83. A breach of the latter would open the door for a re-test of the rising wedge bottom trendline, around 135.00-135.20. Once cleared, the following demand zone would be the rising wedge target at 132.00, followed by the 200-DMA at 131.32.

Key Technical Levels