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I’m thinking of going with the flow on EUR/JPY’s short-term and long-term downtrend.

The pair looks prime for another correction to a nearby resistance level, and it looks like the euro could remain under downside pressure.

Before we talk setups, make sure to read the movers and shakers in the late U.S. and most of Asian session trading!

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • U.K. inflation reports coming up at 8:00 am GMT
  • Eurozone final headline core CPI readings at 11:00 am GMT
  • BOE member Haldane to testify at 11:30 am GMT

What to Watch: EUR/JPY

EUR/JPY 1-hour Forex Chart
EUR/JPY 1-hour Forex Chart

Unless you’re still busy catching up on the latest season of The Crown, you’ve probably tuned in to risk-off flows after the U.S. retail sales release.

This has favored the safe-haven yen in the latest trading sessions, dampening the optimism that stemmed from positive vaccine developments.

EUR/JPY has already been on a slide over the past few days since several nations in the euro region are imposing stricter lockdowns to keep the rising number of coronavirus cases in check.

The pair is cruising inside a falling trend channel on the 1-hour chart and is bouncing off support, so a quick pullback to nearby resistance levels could draw more euro bears in.

The 50% Fib level lines up with the channel top near the 124.00 major psychological mark and an area of interest where sellers could be waiting. If you’re looking to go short, better wait for Stochastic to reach overbought conditions or for the moving averages to make a bearish crossover.