The EUR/JPY pair continues to build on its recent bullish momentum, climbing higher for the second consecutive day on Friday, as the Japanese Yen (JPY) remains pressured by uncertainties surrounding the Bank of Japan’s (BoJ) future rate hikes. Spot prices have managed to maintain levels above the 172.00 mark, signaling a positive outlook for the pair, albeit with some caution as the price struggles to extend beyond the mid-172.00s.
Technical Analysis: Bullish Signals and Strong Support Levels
The technical setup for EUR/JPY remains favorable for bullish traders. Repeated rebounds from the 200-period Exponential Moving Average (EMA) on the 4-hour chart have provided strong support, with price action consistently pushing higher. In addition, positive oscillators on both the hourly and daily charts confirm the path of least resistance is to the upside. A sustained breakout beyond the 172.70 level, which marks the weekly high, would solidify the positive momentum, paving the way for further gains.
The pair could then target the next key resistance at the 173.00 mark, potentially breaking through to the 173.60 area. Should the bullish trend extend further, the 174.00 level, a one-year high reached in July, is the next significant barrier. A decisive move above this could open the door for a further ascent toward the 174.50 region, with the ultimate target being the psychological 175.00 mark and the July 2024 swing high at 175.40-175.45.
Key Support Zones and Risks for EUR/JPY
On the downside, any weakness below the 172.00 mark could trigger buying interest near the 171.50 horizontal support level, which is expected to provide a solid foundation. If the price dips further, the 200-period EMA on the 4-hour chart, currently around 171.25, will act as a crucial support zone. Should the pair break below the 171.00 round figure, it could invalidate the bullish outlook and shift the near-term bias towards bearish traders.
Outlook: Bullish Sentiment Persists
Overall, the bullish sentiment for EUR/JPY is likely to persist as long as the pair remains above 172.00. The pair is supported by strong technical indicators and a positive setup, which suggests further upside potential. Traders will look to buy on dips towards the 171.50-172.00 range, with the key resistance levels at 173.00 and beyond setting the stage for the next phase of upward momentum.
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