The EUR/JPY currency pair is currently experiencing a move to the upside, trading around 162.70 during the Asian session on Monday. However, the technical outlook suggests that its upward trend may be weakening. The pair is testing the lower boundary of an ascending channel, indicating a potential bearish signal. Furthermore, the 14-day Relative Strength Index (RSI) remaining below the key 50 level, enhances the case for a bearish view.
Regarding the immediate support, the EUR/JPY is approaching the lower limit of the ascending channel at the 160.50 level. A significant breach below this point could lead to increased bearish pressure, potentially pushing the pair closer to its recent low of 156.18, which was marked in early December.
On the resistance front, the first substantial barrier lies at the nine-day Exponential Moving Average (EMA), positioned at 161.31. Should the pair manage to surpass this level, it would face further resistance at the 14-day EMA at 161.64. A rally above these indicators could signify a revival in short-term price momentum, enabling the pair to target its two-month high around 164.90.
Additionally, there is a notable resistance area near the six-month high of 166.69, which was last encountered in October 2024. Above this peak, the psychological level at 167.00 becomes significant, coincidentally aligned with the upper boundary of the ascending channel. As the EUR/JPY continues to navigate these technical levels, traders will closely monitor any shifts that could influence potential price direction in the near future.
