EUR/JPY Tests Key Support Amid Bearish Trend and BoJ AI Focus

The EUR/JPY currency pair is experiencing its seventh consecutive day of decline, currently trading around 176.70 during Asian hours on Monday. Technical analysis of the daily chart indicates that the pair is testing the lower boundary of an ascending channel near 176.50. This could either lead to a temporary bounce toward the channel's upper limit or a break below, signaling further downward momentum.

The 14-day Relative Strength Index (RSI) stands at 27.00, indicating oversold conditions that might slow the decline but not reverse the overall negative trend. The pair remains below both the nine- and 50-day Exponential Moving Averages (EMAs), reinforcing the bearish near-term outlook.

On the downside, a break below the channel's lower boundary could target the 11-month low of 175.70, with further support at the 14-month low of 169.72. On the upside, potential resistance levels include the nine-day EMA at 178.27, the 50-day EMA at 181.34, the channel's upper boundary at 184.40, and the all-time high of 187.95 set on April 17.

The Bank of Japan (BoJ) has highlighted artificial intelligence (AI) as a new positive demand shock for the Yen. A speech by BoJ's Uchida scored 7.2 on the FXS Speechtracker, aligning with Uchida's historic average, suggesting a stable tone rather than an urgent policy shift. The emphasis on AI as a major positive demand shock could support the Yen by pushing up economic activity, prices, and long-term rates.