EUR/JPY Price Analysis: A rising wedge in the daily chart looms and targets 132.00
- Despite retreating from weekly highs, the EUR/JPY is gaining 0.92% in the week,
- A negative market sentiment keeps safe-haven peers in the FX space buoyant.
- 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 EUR/JPY edges lower after reaching fresh weekly highs at around 136.79 and daily lows just below the 50-DMA at 135.64, blamed on a dampened market sentiment that increased appetite for safe-haven peers. At the time of writing, the EUR/JPY cross-currency pair is trading at 136.16.
Dismal sentiment keeps the euro on the defensive
Risk aversion continued for the second consecutive day in the week. Global equities are trading lower on expectations that the US Federal Reserve will not achieve a soft landing as it tightens monetary conditions, aiming to tackle high inflation around quadruple its target. Furthermore, China’s coronavirus crisis, which spurred factory halts in April, particularly in Shanghai, clouds the economic outlook.
Elsewhere, the EUR/JPY pair opened near the daily high and tumbled as sentiment turned sour, aiming towards the 50-hour simple moving average (SMA) at 135.95, breaking on its way south, support levels like the daily pivot point at 136.05. However, the cross-currency is back above the central daily pivot point, though down in the day by some 0.37%.
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 is forming, 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 135.64. A breach of the latter would open the door for a re-test of the rising wedge bottom trendline, around 134.80-135.10. Once cleared, the following demand zone would be the rising wedge target at 132.00, followed by the 200-DMA at 131.24.
