FxWirePro: EUR/JPY rebound lacks strength, could resume downside

The common currency fell to as low as 130.645 yen, its lowest since late April after the deadly attacks in Paris added to caution on the common currency. Weakening risk sentiment on falls in oil and commodity prices and falling U.S. shares (on Friday) as well as futures early on Monday helping to keep the yen supported.

• Even before the attacks, the euro had been under pressure from expectations the ECB will step up monetary easing next month. The terrorist attacks in Paris now perceived as the leaving the ECB with no other option than extending QE and likely cut rates further, as the fluid situation is likely to impact consumer confidence, GDP growth and inflation expectations across Europe. 
• EUR/JPY has rebounded to retake the 131 handle and is currently trading at 131.35, however rebound lacks strength.
• Should the risk-off sentiment worsen following the Paris attacks by ISIS, which has been followed by an immediate retaliation on ISIS targets in Syria by France, then EUR/JPY is one of the most vulnerable pairs to resume the downside. 
• Markets look to inflation data due out of the euro zone later in the day. ECB President Mario Draghi and Board member Vitor Constancio are scheduled to speak at separate events on Monday.

Resistance Levels:

R1: 131.48 (Trendline)
R2: 131.96 (5 DMA)
R3: 132.16 (10 DMA)

Support Levels:

S1: 131.29 (Apr 30 lows)
S2: 131 (Psychological Level)
S3: 130.83 (June 3rd low)