The EUR/JPY currency pair is experiencing a rebound, recovering from a recent low that was recorded nearly a month ago. This recovery reflects a combination of factors, including uncertainties regarding the timing of an interest rate increase by the Bank of Japan (BoJ) and an overall risk-on sentiment that has weakened the Japanese Yen (JPY). While the EURO (EUR) benefits from these dynamics, the European Central Bank’s (ECB) dovish stance may limit further gains for the EURO bulls.
Following a dip below the psychological level of 160.00, the EUR/JPY pair has attracted buyers and is maintaining its upward momentum. During early Tuesday trading, the pair was observed around the 161.75 to 161.80 range, exhibiting an increase of approximately 0.45% for the day. This performance indicates a positive bias in the market, which is supported by a slight downturn in the US Dollar (USD), further enhancing the appeal of the EURO .
From a technical standpoint, the pair’s ability to surpass the 50-hour Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level observed in recent weeks suggests a favorable outlook for bullish traders. The presence of positive oscillators on the 1-hour chart bolsters the likelihood of further intraday gains. Should the EUR/JPY move beyond the 162.00 mark, it could potentially target the 100-hour SMA and the 50% Fibonacci level convergence near 162.25.
Conversely, if the pair slips below the 161.50 area, particularly concerning the 50-hour SMA, this could present a buying opportunity, with support likely to be found near the 161.00 round figure, which aligns with the 23.6% Fibonacci level. A strong break below this support could pave the way for a more substantial decline towards the 160.00 level, with additional support anticipated around 160.60 and 160.55, and a possible extension towards the 159.50 support zone.
