During the early hours of Thursday’s trading in Europe, the EUR/JPY currency pair experienced a small uptick, hovering around 185.65. However, potential gains could be capped due to worries about possible currency intervention from Japanese authorities.
Japan’s Finance Minister, Satsuki Katayama, stated on Wednesday that the government is prepared to take necessary actions regarding foreign exchange if the situation calls for it. She also mentioned her agreement with the Governor of the Bank of Japan (BOJ) on certain issues.
On another note, the European Central Bank’s assertive approach might help support the euro. A recent poll of economists suggests the ECB is expected to raise its deposit rates to 2.25% during the next policy meeting in June, with another increase potentially coming in September.
Technical analysis:
Looking at the daily chart, the EUR/JPY is positioned around 185.64, remaining stable above the Bollinger Middle Band at approximately 185.15 and the 100-day simple moving average (SMA) near 184.48, which indicates a somewhat bullish outlook. The pair has been trading in the upper half of the recent Bollinger range, with the upper band close to 186.02 serving as nearby resistance. The Relative Strength Index (14) is around 55, signaling solid, although not excessive, upward momentum.
If the price closes above the Bollinger upper band of 186.02, it could propel the rally to further highs in subsequent sessions. Conversely, initial support is anticipated at the middle Bollinger band around 185.15, followed by the 100-day SMA at 184.48, and the lower Bollinger band at approximately 184.28, where we expect buyers to step back in if the downturn continues.
