EUR/JPY: eyes for a break to below 129 handle

• EUR/JPY: minor recovery struggles and morphs into a sideways consolidation.
• EUR/JPY: trades below the cloud, eyes to 128.96.

EUR/JPY has started out the Tokyo session slightly offered, although consolidates the minor recovery from below the 30 handle, basing on the 21 and 10-hr SMA. Currently, the cross is trading at 130.44 with a high of 130.59 and a low of 130.41.

EUR/JPY was taken down from the 133 handle towards the end of April and has been in a tailspin since then, dropping over 300 pips. There has been a pick-up in stocks of late but the cross has been pressured by a stronger dollar and the euro pushed below the 1.20 psychological level. 

Eyes back on trade

Meanwhile, the stock markets are bouncing back to critical resistance levels and now that we have seen the Federal Reserve meeting, the monthly jobs report and the with the majority of the earnings season behind markets, focus turns back to global trade headlines in coming weeks which could create a sense of caution again keeping a lid on recoveries in the cross as the yen attracts safe haven bid. 

EUR/JPY levels

Analysts at Commerzbank explained that EUR/JPY remains on the defensive and has eroded the base of the cloud, currently at 130.54. 

"Below the 130.54 cloud lies the 130.00/129.90 78.6% retracement. In this vicinity we also find the 55 and 200-week moving averages."

"This is the last defence for the 128.96 level. We have conflicting analysis and no strong bias at this juncture. Our suspicion is that it is on the defensive but the downside is now limited. Should this hold the downside we will allow for recovery once more and a retest of the 133.48 recent April high."