EURJPY is struggling to gain positive momentum after its fast rebound stalled around 126.40 and within September’s resistance region last week.
The downside reversal in the RSI and the slowdown in the Stochastics justify the diminishing buying pressure, though both remain well above their neutral thresholds keeping the short-term risk skewed to the upside. The MACD is also comfortably within the positive territory and above its red signal line despite losing some steam, while in trend indicators, the bullish cross between 20- and 50-day simple moving averages (SMAs) is still an encouraging signal.
Should selling forces strengthen, the Fibonacci retracement levels of the 127.06 – 121.60 down leg will come under the spotlight. The 61.8% Fibonacci of 124.97 could initially turn support to keep the bias on the positive side. Moving lower, the 50% Fibo of 124.33 could next add some footing ahead of the 38.2% Fibonacci of 123.69, while a break below the 23.6% Fibonacci of 122.89 would put the recent upside correction under examination.
Alternatively, a close above the 126.40 barrier will brighten the broader outlook, pushing the price towards the 127.50 key level, which has been frequently tested during the 2017-2018 period. Beyond that, the rally may gear up to 129.30.
In brief, EURJPY is facing a weaking bullish bias, where a drop below 124.97 is expected to enhance selling interest.
