During the early European trading hours on Friday, the EUR/JPY cross continued its upward trajectory around 169.20. The Japanese Yen (JPY) faced depreciation following Japan’s more-than-anticipated economic contraction in the first quarter of 2024, posing a challenge to the Bank of Japan‘s (BoJ) efforts to steer interest rates away from near-zero levels.
The Bank of Japan’s decision on Friday to maintain the amount of bonds purchased in regular operations unchanged contributed to a slight decline in the JPY. This decision followed a previous week’s surprise reduction in purchases, as reported by Bloomberg, which initially bolstered the currency.
From a technical perspective, the bullish sentiment surrounding EUR/JPY remains intact, with the cross holding above the 100-period Exponential Moving Averages (EMA) on the four-hour chart. The Relative Strength Index (RSI), currently hovering around 62.60 in bullish territory, reinforces the buying momentum for the time being.
The immediate resistance level for the cross is anticipated near the May 15 high of 169.40. Beyond this, attention is drawn to the psychological round figure of 170.00, which could serve as an additional upside barrier. A decisive breach above 170.00 may pave the way for further gains towards the next resistance zone around the April 29 high of 171.60.
Conversely, on the downside, initial support is identified at the 100-period EMA at 167.80. Further downward movement could target the May 16 low at 167.33, followed by the April 29 low of 165.66.
