- EUR/JPY gained momentum on Thursday near 166.85, its highest since 2008.
- The cross maintains a bullish atmosphere with an overbought RSI condition.
- The first resistance level appears at 166.82. Initial support level is 165.35.
At the beginning of Thursday’s European trading session, the euro/yen cross was trading in positive territory for the fifth day in a row. The cross index rose to 166.85, its highest level since 2008. Prior to the Bank of Japan’s (BOJ) interest rate decision, the Tokyo April Consumer Price Index (CPI) will be released on Friday. Markets expect Japan’s central bank to keep interest rates and bond purchases unchanged for the first time since March, when it raised interest rates for the first time since 2007. The divergence between interest rates in Japan and the euro area is the main factor putting pressure on the Japanese yen (JPY) versus the euro (EUR).
Technically, EUR/JPY remains bullish on the 4-hour chart as the cross is above the 50-period and 100-period exponential moving averages (EMA) and has an upward slope. Maintained. The Relative Strength Index (RSI) remains in bullish territory above 70. However, the overbought condition of the RSI indicates that further consolidation cannot be ruled out before preparing for a near-term EUR/JPY rally.
The first upside barrier for the cross appears near the upper border of the Bollinger Band at 166.82. The next hurdle will likely be at the psychological level of 167.00. A bullish breakout of this level would send the price up to the 2007 year-to-date high of 168.95 on the way to the July 2008 all-time high of 169.78.
Conversely, the first support level for the cross is located near the March 20 high at 165.35. Further south, the next level of contention to watch is the 50-period EMA at 165.11, followed by the 100-period EMA at 164.62. A breakout of this level will result in a fall to the lower bound of the Bollinger Band at 164.30.
