EURJPY Daily Forecast The EUR/JPY pair continues its uptrend for the second day in a row, approaching the upper boundary of its medium-term trading range and testing the important 163.00 level. This uptrend is driven by a number of macroeconomic and geopolitical factors. The most notable of these factors is the continued improvement in global risk sentiment as a result of easing trade tensions. This has boosted investor confidence and spurred demand for higher-yielding currencies such as the euro. In addition, with the European Central Bank taking a more stable policy stance compared to other currencies, the euro is increasingly seen as a viable alternative to the US dollar. Meanwhile, the Japanese yen continues to face selling pressure. Recent reports that the Japanese Ministry of Finance may adjust the amount of government bond issuance in order to stabilize government bond yields have further accelerated the yen’s weakness. From a technical perspective, the EUR/JPY chart shows a cautiously optimistic outlook in the short term. The momentum indicators’ performance confirms this positive neutral trend. The MACD indicator is currently hovering near the zero line, which suggests that the market is not showing strong momentum in either direction but is awaiting a possible breakout. The Relative Strength Index (RSI) is testing the neutral 50 level, indicating that buyers and sellers are currently relatively balanced, although the indicator is starting to turn slightly bullish. Moreover, the Stochastic indicator is showing bullish momentum in the oversold zone, which suggests that bullish momentum is building after the recent downtrend. If bullish sentiment continues to strengthen and EUR/JPY breaks the 164.10 resistance level, EUR/JPY could break out of the congestion zone that has been in place since August 2024. A successful breakout above the resistance line would be a strong bullish signal and could open the door for further gains. The next key area to watch for gains is the October 2024 high at 166.70. The move ahead would be a major technical achievement and a key turning point to break the long-term sideways trend, which would mean that EUR/JPY has entered a new phase of the uptrend. However, a cautious approach is important here, as EUR/JPY has been trading in a broad sideways trend for several months now. Failure to sustain the uptrend above the 50-day simple moving average could weaken the uptrend momentum. In such a scenario, the price could start to fall towards the 200-day simple moving average (SMA) near 161.40. This level has historically provided significant support and could act as a barrier to further declines. If the price breaks below this key moving average, further declines are likely, with the psychological support level of 161.00 becoming the next target. Continued declines below this fraction could mean a breakdown of the recent bullish structure, with the April low of 158.10 likely to be the next downside target. In terms of broader market impact, traders should pay close attention to new developments in eurozone economic data and comments from European Central Bank officials. These trends could have a significant impact on the euro’s direction. Likewise, changes in the Bank of Japan’s policy, new announcements on fiscal stimulus, and Japanese government bond issuance could have a significant impact on the yen. The Japanese yen is particularly sensitive to divergence in monetary policy expectations between the eurozone and Japan, making it a key indicator for traders trying to gauge interest rate differentials and macroeconomic trends. In other words, EUR/JPY is showing signs of gaining momentum as it approaches the upper limit of its long-term trading range. A break above 164.10 could spark further gains, but for now, prices are technically range-bound. Traders will have to watch closely to see if bulls can sustain the pressure and break through this resistance level. This could signal the start of a potential medium-term uptrend. Conversely, failure to hold key support levels, particularly the 50- and 200-day SMAs, could indicate a shift in sentiment and increase the likelihood of a downside correction. As it stands, the pair’s direction in the near term hinges on a combination of technical confirmation and macroeconomic catalysts.
