The EUR/JPY pair extended its gains for the second consecutive day on Friday, trading near the mid-164.00s as European markets opened. Prices remain close to a three-week high reached on Thursday, buoyed by a broadly weaker Japanese Yen (JPY).
Weaker-than-expected household spending data from Japan, coupled with a fourth straight monthly decline in real wages, has heightened concerns over Japan’s economic momentum. These factors, alongside ongoing global trade tensions, are expected to challenge the Bank of Japan’s (BoJ) efforts to tighten monetary policy. This environment continues to weigh on the safe-haven Yen and provide upward momentum for the EUR/JPY cross.
Technically, the pair has repeatedly failed to settle below the critical 200-day Simple Moving Average (SMA), signaling strong support and favoring bullish momentum. Daily chart oscillators remain positive and far from overbought levels, indicating that the path of least resistance points upward.
As a result, the EUR/JPY cross is poised to test the psychological 165.00 level, with further upside potential toward the 165.20 region, near the year-to-date high reached in May. Continued momentum could see the pair challenge the intermediate resistance at 165.60-165.65 before bulls set their sights on reclaiming the 166.00 mark, a level not seen since November 2024.
On the downside, immediate support lies near the 164.25-164.20 area, followed by the 164.00 round figure and the 163.70-163.65 zone. Any dips below these levels may present buying opportunities but are expected to find a strong floor near 163.00. A break below this pivotal support could shift near-term sentiment in favor of bears.
With the Yen under pressure and technical indicators signaling strength, the EUR/JPY cross looks set to maintain its upward trajectory in the near term.
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