- EUR/JPY bears are presenting a battle to the bulls at the 20-day SMA, with the buyers struggling to consolidate above.
- The daily chart flashes bullish signals, with the four-hour indicators indicating at exhaustion.
- Fundamentals favour the EUR over the JPY.
On Tuesday, the EUR/JPY cross slightly advanced to the 158.36 area over the 20-day Simple Moving Average (SMA), but the buyers struggle to make a significant upward movement.
The technical analysis of the daily chart suggests a neutral to bullish stance for EUR/JPY as the bulls work on recovering their ground and seem to be slow. The Relative Strength Index (RSI) demonstrates a favourable upward trend above its midline, while the Moving Average Convergence (MACD) histogram displays fading red bars.
However, on the four-hour chart, the same indicators show signs of bullish exhaustion, with the RSI turning south and the MACD displaying flat green bars.
Regarding trends, the pair is above the 20,100,200-day Simple Moving Average (SMA), pointing towards the prevailing strength of the bulls in the larger context. However, if the buyers fail to consolidate above the 20-day SMA, another downward leg may be in sight for the pair. On the fundamental’s side, the outlook is more favourable for the EUR, mainly driven by monetary policy divergences between the European Central Bank (ECB) and the Bank of Japan (BoJ).
EUR/JPY Levels to watch
Support levels: 158.37 (20-day SMA), 158.00, 157.00.
Resistance levels: 159.00, 159.50, 160.00
EUR/JPY Daily Chart