Last week, the euro took a hit after ECB members discussed front-loading QE. Basically, the council sounded like it was still in aggressive stimulus mode. The market has been trading the euro as if the ECB were turning the corner and starting to be less aggressive, less dovish. But this was not the case and we can see the EUR/JPY fall at the start and end of last week. EUR/JPY 4H Chart 5/24(click to enlarge) In the 4H chart, we can see that EUR/JPY already broke below a rising speedline from the May low of 133.10. Price also fell below the 100- and 50-period simple moving averages (SMAs) and then treated them as resistance. This is a strong bearish signal. The RSI has fallen below 40, which reflects loss of the prevailing bulish momentum from April. As we begin this week, price is testing a rising trendline from mid-April. A break below 133 should clear the trend and make a new low on the month, which should complete the proces of a rounded top. Now, if price bounces off 133 or cracks it and rebounds immediately, we should monitor the 135 level. If price pushes above 135, the bullish outlook should still be in play, with the 136.96 high on the month as the first target. However, if price appears to be anchored below 135, we should expect further downside risk perhaps first towards the 130 psychological level. EUR/JPY Daily Chart 5/24(click to enlarge)Even if the the price top stands, let's be cautious about the bearish continuation outlook. In the daily chart, we can argue that because price held under the 200-day SMA, the market is still bearish. But, let's consider a couple of things. The RSI tagged above 70, which showed bullish momentum, so at most we should be expecting a medium-term sideways market.Now, even above the 130 level, there is a key support area around 130.75-131. This involves the 50-day SMA, and a previous support pivot/January low. Also, if EUR/JPY is turning bullish a rebound from this area would confirm the bullish breakout from the trendline that fell from the Dec. 2014 high. So, in the short-term, let's monitor 133 for a break to open up a bearish outlook, but first limit this bearish outlook to the 130.75-131 area.