EUR/JPY Forecast: Bullish Momentum Holds Above 100-Day EMA, But Overbought RSI Signals Caution

EUR/JPY extends its upside trajectory, trading near 172.80 in Friday’s early European session. The pair continues to maintain a bullish structure as long as it holds above the 100-day Exponential Moving Average (EMA). However, caution is warranted as the Relative Strength Index (RSI) enters overbought territory.

JPY Weakens Amid Diminished BoJ Rate Hike Expectations

The Japanese Yen remains under pressure as fading expectations of an imminent Bank of Japan (BoJ) rate hike weigh on sentiment. Japan’s latest National CPI data underscores the BoJ’s challenge in navigating persistent inflation and external risks, particularly from U.S. tariffs, which threaten to stall fragile economic growth.

Technical Setup: Bullish Bias Intact, But RSI Signals Potential Pause

From a technical perspective, EUR/JPY continues to show strength, comfortably trading above its 100-day EMA on the daily chart—a key indicator that underpins the bullish trend. However, with the 14-day RSI hovering around 70.50, overbought conditions may trigger a period of consolidation or a short-term pullback before fresh gains.

Key Resistance Levels to Watch

• Immediate resistance: 173.25 (July 16 high)
• Next upside barrier: 173.55 (Upper Bollinger Band)
• Major breakout level: 174.52 (July 3 high)

A decisive move above 173.55 could accelerate bullish momentum and open the path toward retesting the multi-week high at 174.52.

Support Levels to Monitor

• First support: 170.00 (psychological level)
• Next key level: 169.04 (July 2 low)
• Additional downside target: 168.10 (June 25 low)

A break below 170.00 may invite deeper losses and shift near-term sentiment in favor of the bears.

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