EUR/JPY fails at weekly 200-SMA, RSI divergence adds bearish bias

• EUR/JPY fails at weekly 200-SMA, resumes downside with hammer formation on weekly charts.
   
• Yen remians bid across the board on risk-off after Barcelona 'Terror Attack', dragging the pair lower.
   
• ECB minutes highlighted stronger growth but also noted that policy will need to remain expansionary for underlying inflation pressures to converge on 2%.
   
• Technicals on weekly charts are turning bearish. Stochs are on verge of rollover from overbought levels.
   
• RSI is biased lower and MACD is on verge of bearish crossover on signal line.
   
• Also, we note bearish divergene from price action on Stochs and RSI on daily charts which supports downside.
   
• Retrace into channel top at 127.40 will raise scope for test of channel base. Upside seen only on decisive break above weekly 200-SMA.

Support levels - 127.40 (channel top), 127, 124.60 (trendline)

Resistance levels - 128.22 (50-DMA), 129.00 (5-DMA), 129.76 (20-DMA), 130.54 (weekly 200-SMA)

Recommendation: Watch out for close below 127.40 for weakness.