EUR/JPY drops to 112.60, 3-week low

EUR/JPY continued to decline, extending the sell-off that started yesterday after the European Central Bank decision. Recently a stronger Japanese yen pushed the pair further to the downside amid risk aversion. 

It bottomed at 112.59, the lowest level since September 30 and is was trading at 112.90, down 0.61% for the day so far. On a weekly basis, it is falling 130 pips, headed toward the lowest close since July. 

Levels to watch

A weekly close significantly below 113.00 would clear the way for a test of the strong support area around 112.00, that capped the downside during the last months. On a wider perspective the trend continues to point lower but since July it has been consolidating. 

A break and a consolidation above the 116.00 area could change the short-term outlook and favor the euro over the yen, as EUR/JPY would be on top of a key horizontal resistance and also on top of the 20-week moving average, that currently stands around 115.75.