The EUR/JPY currency pair is currently facing challenges as it approaches the 200-period Simple Moving Average (SMA) on the 4-hour chart, leading to rejection near this critical level. As the market evolves, various factors are supporting the Japanese Yen (JPY), creating additional pressure on the EUR/JPY cross. Bears in the market may be inclined to wait for a definitive break below the 163.00 threshold before making new trading decisions.
As of Thursday’s Asian session, EUR/JPY is trading around the mid-163.00s, reflecting a 0.20% decline for the day. The JPY’s strength is fueled by prevailing concerns regarding possible market interventions and geopolitical tensions. This climate of uncertainty, combined with speculation that the Bank of Japan may hint at another interest rate hike soon, further reinforces the appeal of the Japanese currency. While the EURO has managed to maintain some value amid weakening US Dollar dynamics, this has not been enough to prevent losses for the currency pair.
Technically, the repeated inability of the EUR/JPY to maintain its position near the 200-period SMA suggests a bearish sentiment in the market. With oscillators on the daily chart showing initial signs of negative momentum, the prevailing trend seems to favor further declines. However, any downturn might find some support just above 163.00 and within the 162.50 – 162.40 range.
If the selling pressure continues, there is the potential for the EUR/JPY to test lower weekly levels, including the 161.50 – 161.45 area. The market may also see significant support near the psychological level of 160.00. On the other hand, for a bullish outlook to materialize, the cross needs to break through the immediate resistance around 164.00, with the next significant barrier at 164.70. A sustained move past the 165.00 level could trigger a momentum shift, paving the way for the pair to reach higher targets such as 165.40 and eventually challenge the 166.00 level.
