The EUR/JPY pair extended its losses for the second consecutive session, trading near 159.60 during Asian hours on Wednesday. The pair remains within a descending channel pattern on the daily chart, signaling sustained bearish pressure.
Technical Indicators Highlight Bearish Bias
The 14-day Relative Strength Index (RSI) is hovering just below the 30 level, confirming the prevailing bearish sentiment. A further dip below this threshold could indicate an oversold condition, potentially sparking a corrective rebound.
The pair is likely to find immediate support at the psychological level of 159.00, corresponding to the lower boundary of the descending channel. A breach of this support could accelerate the downward trend, targeting the September 30 low of 158.10. Beyond this, the 11-month low of 154.41 from December 2023 emerges as a significant downside target.
Potential Upside Scenarios
On the upside, the EUR/JPY pair may encounter resistance near the upper boundary of the descending channel, aligning with the nine-day Exponential Moving Average (EMA) at 161.80. Further resistance lies at the 14-day EMA of 162.43.
A sustained break above these levels would signal a potential momentum shift from bearish to bullish, paving the way for a retest of the four-month high of 166.69, last seen on October 31.
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