EUR/JPY rejected at 5-DMA, drops sharply towards 123

The EUR/JPY cross is seen in the red ahead of the European open, with the weakness mainly attributed to broad yen strength in response to the G7 Summit held over the weekend.

EUR/JPY: heading towards daily lows

The EUR/JPY pair now drops -0.29% to 123.27, unable to sustain the recovery from 123.15, session lows. The cross in the EUR/JPY keeps the offered tone intact and slips back towards 123 handle as the prices meet strong resistance at 5-DMA (123.45) amid persistent broad based US dollar weakness.

Moreover, the yen’s relative strength after the G7 leaders issued strong warning to the Japanese authorities against fx intervention, continues to weigh on the EUR/JPY cross. The week ahead holds a number of significant economic events, including the US GDP figures, Japanese CPI data and Fed Chair Yellen’s speech, which will provide fresh impetus on both the EUR and JPY.

EUR/JPY Levels to consider

The pair has an immediate resistance at 124/124.18 (round number/ May 17 High) and from there to 124.50 (psychological levels). On the flip side, support is seen at 123/122.96 (round number/ May 18 low/) below which it could extend losses to towards 121.88 (May 9 Low).