EUR/JPY Price Analysis: Bears about to bounce should USD/JPY sink

• EUR/JPY bulls could be nearing capitulation within the recent soft correction. 
• Bears are targeting a blow-off to test below 141.00.

EUR/JPY, as the following analysis will illustrate, could be on the verge of a significant move to the downside. The price has been in a broad bearish trend since the start of the month and there could be more to come from the bears should the correction decelerate as follows: 

EUR/JPY H1 chart

EUR/JPY M15 chart

While there this is by no means a cert’, the price is forming a series of topping formations as per the arrows on top of the peaks. This signifies that the correction is decelerating and that a downside continuation is likely to be imminent. Given the grinding correction, there is the prospect of a sharp sell-off below 141.20 for a test below 141 for the days ahead.

However, the price could just as well creep below the trendline support and meet demand around 141.25 before gathering there ahead of the sell-off. In either scenario, USD/JPY bulls will need to capitulate which is a possible scenario considering the fears of intervention from the Bank of Japan:

”We are wary that a move above 145 in USDJPY will compel FX intervention, which could be more likely given the upcoming Consumer Price Index (especially if stronger). That could introduce temporary USD drag. Nonetheless, the USD remains best in class, and we look to accumulate on dips,” analysts at TD Securities explained.