Deeper losses in EUR/JPY likely, recommend fading rallies

Better-than-expected German and EZ PMIs released earlier largely ignored by the EUR bulls, who wait on the sidelines on fears of more ECB easing.

• EUR/JPY has hit lows of 130.56 during the day and has recovered slightly to currently trade at 130.92. Deeper losses likely in the days ahead.
   
• The anticipated quantitative easing expansion by ECB will weigh on EUR taking the pair lower. Risk is for eventual losses upto 129.62 - 76.4% Fibo of 126.08-141.06 rise.
   
• There is a risk of intra-day squeeze higher. An hourly close above 130.97 will lead to a stronger recovery (130.97 is 23.6% retrace of the 132.26-130.57 - fall).
   
• Daily Stochs and RSI are at oversold, some unwinding from lows likely in the near-term, immediate resistance is seen at 131.30 (5 DMA), while support is located at 130.57 (Session Low Nov 23).
   
• We would be looking to fade recovery attempts in the pair around 131.50, place stops at 132.0, TP: 129.65
   

Resistance Levels:

R1: 131.93 (Daily High Nov 20)
R2: 132.26 (Daily High Nov 19)
R3: 132.59 (Daily High Nov 13)

Support Levels:

S1: 130.57 (Session Low Nov 23)
S2: 130.28 (Daily Low Apr 29)
S3: 130.00 (Psychological Level)
S4: 129.61 (76.4% of 126.08-141.06)