EUR/JPY Targets Higher Levels as Sellers Retreat
Market Overview
The EUR/JPY pair started the week with a bullish tone as sellers retreated after an earlier decline. The Yen gave up its early Monday gains, which followed an increase in February’s industrial production. Meanwhile, the Euro saw renewed buying interest after Germany’s retail sales unexpectedly surged, marking the strongest quarterly rise since Q3 2022. Market participants are now positioning for key economic releases on Tuesday, including Japan’s Tankan manufacturing and quarterly production indices, along with European inflation data.
Technical Analysis
On the hourly chart, EUR/JPY appears to be initiating a corrective upward movement after a period of selling pressure. The pair has rebounded as the RSI moved back toward the 50 level from oversold territory, indicating a potential shift in sentiment. Buyers are challenging the immediate resistance at 161.745, which aligns with the midline of the Bollinger Band, highlighting its significance.
If the pair manages to sustain a break above this resistance, it could open the door for further gains toward 161.939, followed by 162.185 and the upper target at 162.457. Momentum indicators are increasingly supportive of a bullish move. The MACD histogram has crossed above the zero line, reinforcing positive sentiment. However, if sellers reassert control, a move below the immediate support at 161.473 could push the pair toward 161.033, potentially resuming the broader bearish trend.
Key Technical Levels
- Resistances: 161.745, 161.939, 162.185, 162.457
- Supports: 161.473, 161.033
Fundamental Drivers
The recent strength of the Euro reflects optimism after Germany’s robust retail sales data, while the Yen’s momentum weakened despite positive industrial production. Traders are cautiously awaiting Tuesday’s releases, including Japan’s Tankan manufacturing index and Eurozone inflation figures, both of which could significantly influence market sentiment. Any surprises in these data points could drive volatility in EUR/JPY, particularly if Japan’s data diverges from expectations or European inflation shows signs of acceleration.
Conclusion
EUR/JPY is attempting a bullish recovery, targeting 161.939 and above. A drop below 161.473 would challenge the uptrend and put sellers back in control.
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