EURJPY completed two consecutive negative days after it challenged a fresh 16-month high of 126.74 in the previous week. The steep upside movement is still in place and it has been holding since May 6, when it pulled back from the 114.40 support level.
From the technical viewpoint, the price is remaining above the simple moving averages (SMAs) in the daily timeframe, however, the momentum indicators are reflecting the recent downside move. The MACD is losing ground beneath its trigger line in the positive area, while the RSI is pointing down after the pullback on the 70 region.
In case of more decreases, immediate support is coming from the 20-day SMA currently at 124.72 before touching the ascending trend line around the 123.84 barrier, being the 23.6% Fibonacci retracement level of the up leg from 114.40 to 126.74. A penetration of this area, would change the outlook to neutral, hitting the 123.00 handle, which overlaps with the 40-day SMA and the 38.2% Fibonacci of 122.05.
Alternatively, a bounce off the 125.60 support and the red Tenkan-sen line or even lower a rebound on the rising trend line could open the way for another meeting with the 16-month peak of 126.74 before creating a higher high at 127.50 in the short-term. More gains could send the market towards the December 2018 high at 129.25.
Concluding, EURJPY has been forming a significant upside rally over the last three months and there is an expectation of a rebound on the uptrend line before it continues the bullish tendency.