By: Mike Kulej
Not that long ago the EUR/JPY was in a strong bullish mode. Following the G7 intervention to weaken the Yen, this pair rallied to 123.31, a large appreciation, considering that the preceding low had been at 107.65. Since then, however, things have changed dramatically.
The price pulled back to 113.40, corresponding with a minor low from late March. This established an important support. After that, the EUR/JPY failed to resume its bullish direction, testing the new support instead. It dropped to that level again just recently and even closed last week very close to it.
.jpg "EUR-JPY Analysis, June 27, 2011")
It is clear that the EUR/PY is under pressure. The price keeps gravitating lower and some of technical indicators have turned decisively bearish as well. For example, the Ichimoku cloud (Kumo) no longer offers a support for this pair, but became a resistance. The MACD turned under the zero line, which is negative.
What is needed in order to complete the bearish picture, is for the price to close under 113.40 on this daily chart. With the Greek crisis still driving all the Euro pairs, this could easily take place during next few days. If this indeed happens, the EUR/JPY might move much lower – after all the next support is all the way down at 107.65.