The EUR/JPY currency pair is showing signs of recovery after hitting a multi-month low, primarily influenced by a recent decline in the Japanese Yen (JPY). The pair, which previously found support around the 159.10 level, has made some gains during the Asian trading session, approaching the key psychological level of 160.00. This uptick appears to be fueled by renewed selling pressure surrounding the Yen.
Despite this recovery, substantial JPY weakness may be hindered by speculations surrounding a potential interest rate hike from the Bank of Japan (BoJ) in December. Additionally, concerns related to trade policies and ongoing geopolitical tensions may reinforce the Yen’s role as a safe haven, which could limit its declines. Meanwhile, expectations of upcoming interest rate cuts from the European Central Bank (ECB) may pose challenges for the EURO , effectively capping any significant upward movement in the EUR/JPY cross.
From a technical viewpoint, recent attempts to stabilize around the 100-period Simple Moving Average on the four-hour chart have been unsuccessful, suggesting a bearish sentiment in the market. Furthermore, technical indicators on the daily chart remain in negative territory, indicating that any upward momentum may present selling opportunities rather than sustained recovery for the pair.
Looking to the near term, the recent swing high around the 160.70 area serves as an immediate resistance point, while the key level at 161.00 looms just above it. Should the pair break above 161.30, it could initiate a short-covering rally, allowing it to challenge the 162.00 level. However, traders should remain cautious, as momentum may wane near the 162.30 – 162.35 resistance zone, which is critical for short-term trading decisions.
On the downside, the recent low near 159.45 may offer some support, with further protection expected at the 159.10 – 159.05 range. A decisive break below the 159.00 level could trigger a shift to a bearish stance, potentially pushing the EUR/JPY cross to lower support levels, including 158.55 and further down towards 158.00 and 157.65.
