During the early European session on Wednesday, the EUR/JPY cross managed to snap a two-day losing streak, hovering around 169.30. Traders are keeping a close eye on the European Central Bank (ECB) interest rate decision scheduled for Thursday, with expectations leaning towards a potential 25 basis points (bps) interest rate cut.
From a technical perspective, the bearish sentiment persists for EUR/JPY, as the cross remains below the 100-period Exponential Moving Averages (EMA) on the four-hour chart. Supporting this downward momentum is the Relative Strength Index (RSI), residing in the bearish zone near 44.00, suggesting a bias towards further downside movement.
Should the cross manage to breach the 100-period EMA at 169.35, a potential upside could unfold. The key resistance lies at the psychological level of 170.00, with a breakthrough potentially propelling the pair towards the June 4 high of 170.72 and further towards the upper boundary of the Bollinger Band at 171.43.
Conversely, initial support rests near the lower limit of the Bollinger Band at 168.15. A breach of this level might expose the May 16 low at 167.33, with further downside targets including the May 7 low at 165.64. Traders are advised to monitor these levels closely amidst the ongoing market dynamics and speculation surrounding the ECB’s monetary policy decision.
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