EUR/JPY hits 1-week lows as recovery losses momentum

• Yen gains for the third-day in-a-row versus the Euro. 
• Risks tilted again to the downside in EUR/JPY. 

The EUR/JPY pair is about to post the third consecutive decline on Monday after breaking the 124.20/30 area that capped the drop during the second half of last week. 

It bottomed at 123.73, the lowest in a week and during the US session moved off lows and trimmed losses as equity prices in Wall Street moved higher. EUR/JPY reached 124.30 and near the end of the day is hovering around 124.05/10. 

Last week, the recovery from the “mini flash crash” found resistance at the 125.00 handle. The euro was rejected from levels on top and started to pull back. The break of the 124.30 support points to more weakness ahead, particularly if it falls under 124.00. Risk aversion continues to be a key driver of the pair. 

Levels to watch 

A recovery back above 124.50 (20-SMA in four hours chart) would be positive for the euro, but it needs to consolidate on top of 125.00/10 in order to clear the way to more gains with a potential target at 125.70. 

On the flip side, a close under 123.80 would add bearish pressure. The next support is 123.30/40 followed by 122.80.