EUR/JPY hits 3-week lows and rebounds to the key 130.00 area

• EUR/JPY drops sharply but recovers key level. 
• Yen gains on risk aversion triggered by trade war fears. 

The EUR/JPY pair tested today again the 131.00 region but failed to break and dropped sharply. It bottomed during the US session at 129.48, the lowest since March 5 and then rebounded back to the 130.00 area. Price continues to move sideways near a critical support. 

The slide of the pair was triggered by a rally of the yen. The Japanese currency soared on the back of risk aversion. US President Trump announced a plan to impose tariffs on Chinese imports, reviving trade war fears. The DOW JONES was losing 1.67% and the NASDAQ was down 1.37%. 

Technical levels 

The bias continues to point to the downside as EUR/JPY remains unable to recover the 131.00 area. The downside remains limited below 130.00. A daily close well above 131.00 is likely to add momentum to the euro while if the close takes place below 130.00, a decline to the lowest level since August seems likely.

Below 130.00 support levels might lie at 129.60 (Mar 19 low), 129.30 (Mar 5 low) and 129.00. On the upside, immediate resistance could be seen at 130.25/30 (US session high) followed by the 20-day moving average at 131.00 and 131.30.