EUR/JPY reverses sharply: drops 130 pips from the top

• EUR/JPY failed to hold to gains and turned negative. 
• A weaker Euro pushed the pair to the downside. 

Earlier today, the EUR/JPY pair climbed to 131.70, 6-day high but then reversed sharply, falling almost 150 pips from the top. Price suffered an important rejection that could signal the persistence of bearish pressure. 

The Euro came under pressure during the European session following the release of the ZEW survey that showed an unexpected decline to 5.1 from 17.8. The currency continued to slide during the American session. 

EUR/JPY failed to hold on top of 131.00, erased all gains and dropped further. It bottomed recently at 130.33. It was hovering around 130.40/50. Despite holding far from yesterday’s low, today’s reversal shows that so far the Euro is not ready for a sustainable recovery. 

On Wednesday, the Federal Reserve will announce its decision. A rate hike is expected. The event will include the release of updated staff projections and a press conference. Volatility is likely to rise going into the decision. 

EUR/JPY Technical levels 

To the downside, support levels are seen at 130.30, 130.05/10 (Mar 16 low) and 129.60 (Mar 19 low).  On the upside, immediate resistance is located at 130.90 followed by 131.15 and 131.70 (Mar 20 high).