The EUR/JPY pair has been gaining traction, with technical indicators and market sentiment pointing toward a continued bullish trend. As the euro approaches a key resistance level near ¥164, traders are watching closely for potential breakout opportunities.
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Technical Landscape: EUR/JPY Maintains Bullish Structure
The EUR/JPY currency pair continues its steady climb, supported by a robust technical setup. Recent price action shows the euro bouncing decisively off a well-established support zone, reinforcing buyer confidence. Notably, both the 50-day and 200-day Exponential Moving Averages (EMAs) are trending upwards, forming a “golden cross” pattern—an indicator historically associated with strong bullish sentiment.
Momentum indicators like the Relative Strength Index (RSI) are also reflecting the prevailing upward pressure, hovering just below overbought territory. This suggests that buyers remain in control, though short-term consolidation could occur before another leg up. Analysts believe that a break and close above the ¥164.00 level would confirm the next bullish phase, potentially targeting ¥165.50 or higher.
Support levels are currently identified near ¥162.20 and ¥161.50. As long as the pair remains above these thresholds, the bullish outlook remains intact.
Market Drivers: Why the Euro Outpaces the Yen
Beyond technicals, fundamental market dynamics are playing a crucial role in the euro’s dominance over the Japanese yen. The widening interest rate differential between the European Central Bank (ECB) and the Bank of Japan (BoJ) continues to weigh heavily on the yen. While the ECB maintains relatively tight monetary policy to combat inflation, the BoJ remains committed to ultra-loose measures, including negative interest rates.
This divergence is prompting investors to pursue higher yields outside of Japan, creating steady demand for the euro and other higher-yielding currencies. The result is an increasingly bearish stance on the yen, reflected in positioning data and price action.
Additionally, geopolitical stability in the Eurozone and steady economic performance are adding further support to the euro. These macroeconomic tailwinds, combined with technical momentum, are fueling the current EUR/JPY rally.
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Short-Term Forecast: Aiming for ¥164 and Beyond
Looking ahead, the EUR/JPY pair appears poised to challenge and potentially break through the ¥164.00 resistance level. If this level is decisively breached, bullish traders may eye the next psychological target around ¥165.00. Continued support from broader euro strength and ongoing yen weakness would support such a move.
However, caution is warranted. The RSI’s proximity to overbought territory suggests the possibility of minor corrections or sideways movement in the short term. This would offer opportunities for bulls to re-enter at more favorable prices, particularly near dynamic support levels such as the 20-day EMA or the ¥162.50 zone.
For swing and trend traders, the strategy remains clear: maintain a bullish bias as long as price action stays above key support, with tight risk management around breakout levels.
Conclusion: EUR/JPY Remains a Bullish Favorite
The EUR/JPY currency pair has emerged as a favorite among bullish traders, thanks to a confluence of technical strength and macroeconomic divergence. The clear upward trend, solid support structure, and favorable rate environment all point toward further gains.
While some short-term pullbacks may occur, the broader outlook remains positive, especially if the pair can maintain momentum above the ¥164.00 level. With the euro gaining strength and the yen under persistent pressure, EUR/JPY is likely to stay in the spotlight for forex market participants in the coming weeks.
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