The EUR/JPY currency pair weakened to around 165.75 during the early European trading session on Wednesday, pressured by expectations that the European Central Bank (ECB) may implement another cut to its Deposit Facility Rate this year.
Despite this decline, the 4-hour chart indicates a generally positive outlook for the EUR/JPY cross, as it remains above the key 100-period Exponential Moving Average (EMA). The upward momentum is further supported by the Relative Strength Index (RSI), which is positioned above the midline at approximately 62.20, indicating bullish sentiment among buyers in the near term.
The first key resistance level for the pair is identified in the 166.00-166.10 range, which includes the high from October 29 and a significant psychological barrier. A decisive break above this zone could lead to a rally toward 166.55, aligning with the upper boundary of the Bollinger Band. The next resistance to monitor is at 167.95, the high recorded on July 30.
On the downside, initial support for the EUR/JPY pair is observed at 165.16, the low from October 29. If selling pressure persists below this level, the cross could drop to 164.32, the low reached on October 26. Additional support to watch is at 164.06, marking the lower limit of the Bollinger Band.
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