During the early European trading hours on Monday, the EUR/JPY cross maintains positive ground in the mid-161.00s, with investors eagerly awaiting the upcoming monetary policy decision from the Bank of Japan (BoJ) scheduled for Tuesday. The event is anticipated to inject volatility into the market, as market participants keenly observe any signals from Governor Kazuo Ueda regarding the potential timing of lifting short-term interest rates from negative territory. The cross is presently trading around 161.48, marking a modest 0.04% gain for the day.
From a technical standpoint, the bullish momentum of EUR/JPY remains intact, as the cross continues to hold above the 50- and 100-hour Exponential Moving Averages (EMA) on the four-hour chart, both displaying an upward slope. Reinforcing the upward trajectory is the 14-day Relative Strength Index (RSI), situated above the 50 midline, signaling a bias favoring further upside movement.
The immediate upside obstacle for the cross is identified at the upper boundary of the Bollinger Band, positioned at 161.60. A breach above this level could clear the path for an ascent to the January 19 high of 161.86, with the next notable barrier at the psychological round mark of 162.00.
Conversely, a crucial support level to monitor lies at the confluence of the lower limit of the Bollinger Band and the January 18 low at 160.65. A breach of this level might lead to a descent towards the 50-hour EMA at 160.15, en route to the 100-hour EMA at 159.25. Traders remain attuned to these key levels as they navigate the evolving dynamics of the EUR/JPY cross.