This euro pair is hovering at the peak of its range on the 4-hour timeframe, still weighing its options for a bounce or a breakout.
Here are the key inflection points I’m watching!
EUR/JPY: 4-Hour Analysis
After climbing earlier this month, EUR/JPY has entered a consolidation phase just below the minor psychological level of 163.50. This level also marks the upper boundary of its longer-term range that has held since mid-September. The question now is whether it can maintain its gains.
Directional biases and market volatility are often influenced by fundamentals. If you haven't yet reviewed the euro and Japanese yen fundamentals, now is a good time to check the economic calendar and stay updated on daily news!
Last week, the European Central Bank (ECB) announced a 0.25% cut in borrowing costs and provided a slightly downbeat economic outlook. This week's flash PMI readings for the region could indicate whether further policy easing is on the horizon, potentially guiding euro pairs in a clearer direction.
The 100 SMA is positioned above the 200 SMA, suggesting that the path of least resistance is upward. However, watch for a break below the faster-moving SMA near S1 (161.70) to assess if bearish sentiment is gaining strength.
If that happens, EUR/JPY could target the next downside levels at S3 (159.95) near a significant psychological mark or S5 (158.05) close to the October lows.
Conversely, a break above the range top at R1 (163.45) could trigger a move toward the next bullish target at R2 (164.40) or higher, so stay alert!
Remember to keep an eye on this week’s key news events and any headlines that could affect market sentiment when considering your trades.
