The EUR/JPY cross is showing strong momentum around 169.20 in early European trading, with the Japanese Yen weakening due to Japan’s economic contraction in the first quarter of 2024. The Bank of Japan’s decision to keep the amount of bonds it buys unchanged has also contributed to the JPY’s modest decline after an earlier surprise reduction in purchases. Despite these factors, the EUR/JPY continues to maintain a bullish outlook above the 100-period Exponential Moving Averages on the four-hour chart. The Relative Strength Index (RSI) is also in bullish territory near 62.60, further supporting the buyers in the market.
In terms of technical levels, the first resistance for the EUR/JPY cross is seen at 169.40, with a potential upside target at the psychological round figure of 170.00. A decisive break above this level could lead to a rally towards the next barrier at 171.60. On the other hand, the first support level is located at the 100-period EMA at 167.80, with further downside targets at a low of May 16 at 167.33 and a low of April 29 at 165.66. Traders will be closely watching these key levels for potential breakout opportunities in the EUR/JPY cross as it continues its upward momentum.
Overall, the EUR/JPY cross is poised to extend its rally as it remains above crucial technical levels and benefits from the weakness in the Japanese Yen. The BoJ’s recent actions have also contributed to the JPY’s decline, further supporting the bullish bias in the market. With the RSI indicating strong momentum and key resistance levels ahead, traders should keep a close eye on developments in the market to capitalize on potential opportunities in the EUR/JPY cross.
In conclusion, the EUR/JPY cross is showing strength in the early European session, with the Japanese Yen weakening due to economic factors and the BoJ’s recent decisions. Technical indicators support the bullish momentum, with key resistance and support levels identified for traders to monitor. As the market continues to evolve, traders should stay informed of developments and be prepared to take advantage of potential opportunities in the EUR/JPY cross.
