A few months back, we pointed out that EUR/JPY was hanging around a long-term resistance level.
Since then, the pair has taken quite a tumble and is now chilling closer to a major support zone.
So, are the bulls about to step in and send EUR/JPY higher in the next couple of weeks?
EUR/JPY Daily Forex Chart by TradingView
If you caught our latest FX Weekly Recap, you’d know the Japanese yen was one of the strongest—if not the strongest—currencies last week, thanks to risk aversion and hawkish commentary from Japanese officials.
Meanwhile, the euro struggled under the weight of global trade concerns and mixed economic data from the Euro Area.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
EUR/JPY, which has been sliding since the start of the year, dropped another few hundred pips and is now hovering near the 156.00 handle. That’s right around the S2 (156.80) Pivot Point and an area that marked the bottom for the pair in 2024. Plus, the 155.00 – 157.00 zone was a key turning point in 2023.
Could this be the setup for a long-term bounce?
If global trade fears ease and traders take some profits from recent moves, we could see bullish momentum picking up.
Watch for bullish candlestick patterns in the 155.00 – 157.00 zone—if buyers step in, EUR/JPY could push back toward S1 (158.75) or even test the 162.00 resistance level.
That said, the Bank of Japan (BOJ) is likely to keep its hawkish stance, while the European Central Bank (ECB) navigates growth risks in an uncertain environment.
If bearish momentum persists, EUR/JPY could break below 2024’s low at 154.35, potentially drawing in more sellers for a deeper slide toward 151.00 or even 150.00.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Oh, and don’t forget to keep tabs on this week’s set of top-tier news events, as well as any headlines that could impact market sentiment, when taking any trades.
