- EUR/JPY draws buyers for the second consecutive day, though it remains below the weekly high.
- The technical setup indicates potential for a breakout above the weekly trading range.
- A decisive move below the 159.00 level is required to overturn the near-term positive outlook.
The EUR/JPY cross trades with a positive bias for the second consecutive day on Wednesday, although it lacks bullish momentum and remains within a familiar range established at the beginning of the week. Currently, spot prices are around the mid-160.00s, reflecting a nearly 0.25% increase for the day, supported by several factors.
The Euro benefits from the ongoing selling bias against the US Dollar (USD), driven by increasing expectations for more aggressive policy easing from the Federal Reserve (Fed). Additionally, the prevailing risk-on sentiment diminishes the appeal of the safe-haven Japanese Yen (JPY), further supporting the EUR/JPY cross. However, diverging policy expectations between the Bank of Japan (BoJ) and the European Central Bank (ECB) limit significant upward movement for the currency pair.
From a technical standpoint, the range-bound price action can be viewed as a bullish consolidation phase following the upward movement seen over the past couple of weeks. Moreover, oscillators on the daily chart have begun to show positive momentum, reinforcing the potential for an eventual upside breakout. Bulls will need to wait for sustained strength and acceptance above the 161.00 level before considering new positions. If successful, the EUR/JPY cross could accelerate towards the intermediate resistance at 161.40-161.45, paving the way to the key 162.00 round figure.
The next significant hurdle lies in the 162.45-162.50 region; a breakout above this level would allow bulls to target the monthly peak around 162.90. Any follow-through buying past the 163.00 mark would negate the negative outlook and shift the near-term bias in favor of bullish traders.
Conversely, if prices fall back below the psychological 160.00 level, support may be found in the 159.60-159.55 range, followed by the 159.00 round figure or the lower boundary of the weekly range. A convincing breach below this latter support would indicate that the recent upward momentum has stalled, potentially dragging the EUR/JPY cross down to the 158.20 area, with further declines towards the 158.00 mark and into the mid-157.00s thereafter.
EUR/JPY 4-Hour Chart Analysis
