EUR/JPY Price Analysis: Approaches the neckline of the head-and-shoulders pattern around 134.70s

• The euro marches decisively towards the neckline of the head-and-shoulders, though it is facing solid resistance around 134.77.
• A positive market mood in the FX space decreased appetite for safe-haven peers.
• EUR/JPY Price Forecast: The head-and-shoulders pattern remains intact, as the exchange rate remains below 135.25.

The shared currency stays defensive vs. the Japanese yen amidst a raft of negative market moods, courtesy of market players’ worries about the Fed tightening monetary policy aggressively, which threatens to slow down the economic recovery in the US. Alongside the aforementioned, China’s coronavirus crisis and the Ukraine war weighed on sentiment, increasing the appetite for safe-haven peers. At 134.72, the EUR/JPY recovered some ground but remained downward pressured, below the head-and-shoulders neckline, a zone that could see some selling pressure, re-entering the market.

Market sentiment in the New York session has improved, as shown by US equities trading in the green. In the FX space, the safe-haven currencies remain downward pressured, a relief for the battered euro, underpinned recently by ECB policymakers expressing that the central bank would hike rates and get to 0% around the summer.

The EUR/JPY opened around the 134.50 area during the overnight session and dipped below the daily pivot point around 133.70s, recording a daily low. Nevertheless, the cross-currency pair bounced off those levels and settled between the central daily pivot and the R1, around 134.70s.

EUR/JPY Price Forecast: Technical outlook

The EUR/JPY remains downward pressured and is testing the 50-day moving average (DMA) at 134.79. It’s worth noting that around the 135.00-25 area passes the neckline of a head-and-shoulders pattern targeting 130.00. However, the head-and-shoulders pattern remains intact unless EUR/JPY bulls reclaim the abovementioned area.

If the EUR/JPY is about to test the abovementioned level, the first resistance would be April’s 27 daily low at 134.77. Break above would expose 135.00, followed by the necklines, which pass nearby 135.25.

On the flip side, the EUR/JPY’s first support would be May 12 daily low at 132.65, followed by the 100-DMA at 132.36 and the 200-DMA at 131.05.

Key Technical Levels