EUR/JPY Price Analysis: Drops sharply more than 250-pips as bears eye 134.00

• On Monday, the Japanese yen benefited from a dismal market mood, gaining 1.19% vs. the euro.
• China’s Covid-19 outbreak expanding to Beijing, alongside central bank tightening, turned the sentiment sour.
• EUR/JPY Price Forecast: If a daily close below 137.50 is achieved, a dip towards 134.00 is on the cards.

The EUR/JPY nose dives from daily highs around 139.00 towards 136.40s daily lows due to a risk-off market mood that increased demand for safe-haven assets. In the FX space, investors scrambled towards the JPY, the CHF, and the USD, as most G8 currencies print losses vs. the previously mentioned peers. In the North American session, at the time of writing, the EUR/JPY is trading at 137.13.

The market sentiment remained sour throughout the day, spurred by the Covid-19 outbreak in China, which started in Shanghai and is expanding towards Beijing, as reported by Reuters. Also, the Ukraine-Russia jitters and central banks tightening monetary conditions triggered risk aversion.

On Monday, in the Asian session, the EUR/JPY opened near the daily pivot at 138.82 and pushed towards the 139.00 mark to record a daily high. Afterward, the EUR/JPY plummeted more than 250-pips, reaching a daily low at 136.48.

EUR/JPY Price Forecast: Technical outlook

The EUR/JPY daily chart shows the pair remaining upward biased. However, the break below February’s 2018 highs at 137.50 opened the door for further losses. Furthermore, a daily close below the latter and a drop towards 134.00 is on the cards.

If that scenario plays out, the EUR/JPY first support would be 136.00. Break below would expose April’s 11 daily low at 135.27. Once cleared, the EUR/JPY bear’s next target would be April’s 5 daily low at 134.29, followed by the 134.00 mark.

Key Technical Levels