EURJPY has formed lower highs and found support at 122.25, creating a descending triangle pattern on its 4-hour time frame. 

Price is currently testing the triangle resistance, still deciding whether to make a bounce or a break. 

The 100 SMA is below the 200 SMA, confirming that the path of least resistance is to the downside. In addition, the 200 SMA lines up with the top of the triangle and appears to be holding as a dynamic resistance level. 

Stochastic is on the move down, which means that euro bears are taking control of price action. RSI is also heading south so price could follow suit, taking the pair down to the triangle support once more.  

A number of reports are up for release from the euro zone today, providing several catalysts for price action. Preliminary GDP readings from its largest economies are up for release ahead of the region’s growth figure, which is expected to show a 0.6% expansion for Q1. Germany is also set to print its final CPI reading while France will report its non-farm payrolls figure. 

As for Japan, the tertiary industry activity index is up for release and a 0.2% decline is eyed, worse than the previous 0.1% dip. No other reports are up for release from Japan, which suggests that risk appetite could also play a big role in determining direction. 

Top-tier US economic reports due later on in the day could have a material impact on sentiment. Traders might also book profits before the weekend, as Chinese industrial production and retail sales reports are due on Saturday. 

By Kate Curtis from Trader’s Way