The EUR/JPY currency pair is currently experiencing a downward trend that may continue based on recent analyses of its daily performance. The pair has now recorded losses for two consecutive days, trading near the 159.60 level during Wednesday’s Asian session. The prevailing trend is characterized by a bearish bias, as depicted by the descending channel pattern on the daily chart. The situation is further corroborated by the 14-day Relative Strength Index (RSI), which hovers just below the critical 30 level. A fall below this threshold could signal that the pair is in an oversold condition, potentially leading to a corrective bounce.
Looking ahead, the primary support level for the EUR/JPY is anticipated to be at the lower boundary of the descending channel, which aligns with the psychological level of 159.00. Should the pair breach this support, it could lead to significant bearish pressure, with the next target being the recent two-month low of 158.10 reached at the end of September. A further decline could push the currency pair towards an 11-month low of 154.41, recorded in December 2023.
Conversely, if the EUR/JPY manages to rally, it may look to test resistance at the upper boundary of the descending channel, near the nine-day Exponential Moving Average (EMA) at 161.80. A breakthrough past this level could shift momentum from a bearish to a bullish stance. The next resistance to watch would be the 14-day EMA at 162.43. A decisive move above these key levels could potentially enable the pair to retest highs not seen since October, reaching towards the four-month peak of 166.69.
