- EUR/JPY rallied 0.50%, trimming its weekly losses to 0.09%.
- A risk-on impulse capped the EUR/JPY rally above 136.40.
- In the near term, the EUR/JPY is neutral-upward, but a break below 136.00 will expose the pair to selling pressure.
The EUR/JPY begins the Asian session slightly up, extending its gains to three days in a row. On Wednesday, the cross-currency hit a daily high at 136.42 but retraced and closed the trading session around 136.05, gaining 0.50%. At the time of writing, the EUR/JPY is trading at 136.09.
Investors sentiment is upbeat after snapping a two-day drop. US equities registered solid gains between 1.29% and 2.73%. Meanwhile, Asian stock markets prepare for a higher open, while the EUR/JPY sellers remain hopeful as the USD/JPY slides, thus strengthening the yen.
EUR/JPY Price Analysis: Technical outlook
The EUR/JPY daily chart illustrates a neutral bias. Though buyers regained some control in the last couple of days, resistance ahead with the 100-day EMA at 137.83 and July’s 8 low shifted resistance at 136.85 would be difficult hurdles to pass, as buyers target a re-test of the July 21 high at 142.32.
Upside, the EUR/JPY first resistance will be 136.42. Break above will pave the way for further gains ahead of the 100-day EMA. On the other hand, the EUR/JPY path of least resistance is downwards, further cemented by the RSI sitting in bearish territory, beginning to aim lower. So a breach below 136.00 could send the pair sliding towards 135.00.
EUR/JPY 1-hour chart
The EUR/JPY 1-hour chart is neutral-to-upward biased, but the cross faces resistance at a 13-day-old downslope resistance trendline near the exchange rate. Nevertheless, the Relative Strength Index (RSI) is in bullish territory but crossed under its RSI’s 7-hour SMA and is aiming lower, meaning a drop towards the confluence of the 20-hour EMA and the daily pivot point at 135.82 is on the cards.
Therefore, the EUR/JPY first support would be 135.82. Once cleared, sellers’ next support will be the confluence of the 50-hour EMA and the S1 pivot at 135.13, followed by the August 2 low at 134.82.