EUR/JPY Price Analysis: Confined to a descending channel, eyeing 136.00 in the near term

• The shared currency tripped down vs. the Japanese yen on fears of Japanese authorities’ intervention in the FX markets.
• Risk aversion weighed heavily on the EUR as appetite for safety increased.
• EUR/JPY Price Analysis: The trendline break opened the door for further downside, as sellers eye the S2 daily pivot point around 136.50.

The EUR/JPY slipped for the second consecutive day on Tuesday, almost 0.48%, sparked by a fragile market mood, as Wall Street recorded losses for the second successive day on recession worries, while Asian equities are set to open mixed, as shown by the futures market.

The EUR/JPY, Tuesday price action, opened near the highs of the day around 138.00 and tumbled on news that the Japanese Finance Minister reunited with US Secretary of Treasure Janet Yellen to discuss the yen’s rapid fall. Hence, EUR/JPY traders sent the pair to the daily low at around 137.00. At the time of writing, the EUR/JPY is trading at 137.24.

EUR/JPY Daily chart

The EUR/JPY remains upward biased, but a break below a two-month-old upslope support trendline on Tuesday near 137.83, and the Relative Strength Index (RSI), sitting in bearish territory, opened the door for further downside. Therefore, the EUR/JPY path of least resistance in the near term is downwards.

That said, the EUR/JPY’s first support will be the July 8 daily low of around 136.85. The break below will expose the 100-day EMA at 136.23, followed by the May 22 cycle low at 133.92.

EUR/JPY 1-hour chart

In the short term, the EUR/JPY is also tilted to the downside, confined to a descending channel, but it is approaching a solid support level at the July 12 daily low of around 137.02, just above Wednesday’s S1 daily pivot at around 136.88. Nevertheless, it EUR/JPY sellers, break below, that would clear the way towards the confluence of the bottom-trendline of the descending channel and the S2 pivot point at around 136.40-50 area, followed by a drop towards 136.00.

EUR/JPY Key Technical Levels