EUR/JPY Price Analysis: Hovers around 137.20s, unable to break beyond the 136.50-137.50 range

• The EUR/JPY remains trapped in the 136.50-137.50 range.
• Sentiment remains negative amidst central bank tightening and China’s Covid-19 lockdowns, which threaten to derail the post-pandemic economic recovery.
• EUR/JPY Price Forecast: The head-and-shoulders clouds the prospects of a higher EUR.

The EUR/JPY remains in choppy trading amidst a dismal market sentiment, courtesy of central bank tightening, alongside China’s weak service and composite PMIs, and also the acknowledgment of its coronavirus crisis by the Fed and the Bank of England. As the Asian Pacific session begins, the EUR/JPY prints minimal gains of 0.10% and is trading at 137.24.

US equities finished Thursday’s session with hefty losses, between 3.12% and 4.99%. Interest rate hikes in the week by the Federal Reserve and the Bank of England spurred appetite for safe-haven peers. Additionally, ongoing China lockdowns caused by the Covid-19 crisis were acknowledged by both central banks, which said it might disrupt supply chains and spur high inflationary pressures.

EUR/JPY Price Forecast: Technical outlook

The EUR/JPY is upward biased, though a head-and-shoulders chart pattern keeps the pair downward pressured. Nevertheless, the price action of the last four days shows the cross consolidating around the 136.50-137.50 range. If the EUR/JPY breaks upwards and achieves a daily close above 138.00, that would open the door for further upside, which could invalidate the head-and-shoulders.

If the EUR/JPY breaks on top of the abovementioned range, the first resistance would be 138.00. Once cleared, the following resistance would be the April 25 daily high at 139.20. A breach of the latter would expose the YTD high at 140.00.

On the other hand, the EUR/JPY first support would be the 137.00 mark. If EUR/JPY bears break that level, that will expose the 136.00 figure, followed by the head-and-shoulders neckline around 135.00-20.