EUR/JPY Extends Gains Amid Rising Ceasefire Hopes in Ukraine
Market Overview
The euro continues its bullish momentum, reaching a five-month high against several major currencies in Wednesday’s trading session. Optimism surrounding a potential ceasefire agreement in Ukraine has fueled demand for the euro, reinforcing its strength against the Japanese yen.
Meanwhile, the Japanese yen has faced renewed selling pressure as risk sentiment improves, prompting investors to shift away from safe-haven assets. Despite this, expectations of medium-term interest rate hikes by the Bank of Japan (BoJ) provide underlying support for the yen, keeping downside risks in check.
Against this backdrop, EUR/JPY remains in an uptrend, testing critical resistance levels as bullish momentum builds.
Technical Analysis
On the four-hour chart, EUR/JPY is trading near its monthly high, approaching a key resistance zone that has historically limited further upside. The pair has successfully broken above the previous swing high at 160.755, confirming bullish control in the short term.
Currently, price action is testing the 161.911 resistance, which aligns with a significant downward trendline originating from mid-2024. If buyers breach this barrier, the next upside targets are set at 162.626 and 163.782, marking the next potential areas of profit-taking.
Technical indicators support the bullish outlook. RSI remains in the overbought zone, signaling strong buying pressure, while MACD continues to print positive bars, reflecting sustained upside momentum.
However, failure to clear 161.911 could trigger a short-term correction. In this scenario, immediate support is located at 161.264, followed by 160.755. A break below these levels would open the door for a deeper retracement towards 160.040 and 158.884, signaling a shift in market sentiment.
Key Technical Levels
- Resistance 1: 161.911
- Resistance 2: 162.626
- Resistance 3: 163.782
- Support 1: 161.264
- Support 2: 160.755
- Support 3: 160.040
- Support 4: 158.884
Fundamental Drivers
Investors are closely monitoring ECB President Christine Lagarde’s speech later today, as her remarks could provide further guidance on the European Central Bank’s monetary policy stance. Markets will be looking for clues on interest rate adjustments and the ECB’s inflation outlook, which could influence the euro’s trajectory.
Additionally, the German 10-year bond auction is expected to attract significant attention from European investors. Bond market performance may impact euro demand, particularly if yields rise, further strengthening the single currency.
Conclusion
EUR/JPY is testing a critical resistance level at 161.911, with further gains likely if buyers sustain momentum. A breakout could push the pair toward 162.626 and 163.782, while a rejection could trigger a short-term pullback towards support zones. Traders will closely watch ECB and bond market updates for fresh direction signals.
Find us on
