FxWirePro: EUR/JPY breaks major trendline support at 127.90, scope for test of 78.6% Fib

EUR/JPY chart on Trading View used for analysis

• EUR/JPY is extending weakness for the 3rd straight session, trades 0.22% lower at 127.74.
   
• The Japanese yen remains bid amidst risk-off in markets, ignores downward revision of GDP.
   
• Japan's government revised down its GDP and CPI forecast for the current and next fiscal year.
   
• The move reinforced the view that the Bank of Japan (BOJ) is unlikely to move the needle on QE or interest rates any time soon.
   
• Technical indicators are biased lower. RSI and Stochs are sharply lower. Volatility is rising. 
   
• The pair has been rejected at 110-EMA and trendline break has raised scope for test of 78.6% Fib.
   
• On the flipside, immediate resistance is seen at 5-DMA at 128.34. Bearish invalidation only on decisive breakout at 110-EMA.

Support levels - 127.61 (Dec 4 low), 127, 126.66 (78.6% Fib)

Resistance levels - 128, 128.34 (5-DMA), 128.47 (21-EMA)

Call update: Our previous call (https://www.econotimes.com/FxWirePro-EUR-JPY-finds-major-trendline-support-at-12785-good-to-go-short-on-break-below-1473885) is progressing well.

Recommendation: Stay short for targets.

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.