EURJPY stabilizes after downtrend but faces key resistance levels
The EUR/JPY currency pair is showing signs of potential stabilization after a seven-day losing streak, trading around 177.40 during Asian hours on Tuesday. The pair has found initial support at the lower boundary of a descending channel near 176.60. The 14-day Relative Strength Index (RSI) stands at 29.78, suggesting that seller exhaustion may lead to a temporary bounce.
Technical analysis indicates that the primary resistance lies at the nine-day Exponential Moving Average (EMA) at 178.18. A break below the descending channel could signal an accelerating downward momentum, potentially leading to further declines. The pair has slipped below a key structural floor at 175.70, recorded in November 2023, turning recent price action into a corrective phase.
On the upside, the EUR/JPY cross may rebound and test the nine-day EMA at 178.18, followed by the 50-day EMA at 181.20. Further resistance lies at the upper boundary of the descending channel around 184.20, followed by the all-time high of 187.95 set on April 17.
Analysts at Commerzbank argue that the European Central Bank (ECB) has scope to ease market tensions through communication before resorting to more forceful tools. They note that ECB representatives could adopt a less hawkish tone in their public comments, thereby dampening expectations of interest-rate hikes and easing pressure on government bonds. Christine Lagarde’s recent appearance before the European Parliament’s Committee on Economic and Monetary Affairs already points in this direction, as she stressed that the sharp rise in bond yields would dampen economic growth and limit the pass-through of higher energy costs to consumers.