The EUR/JPY currency pair is exhibiting notable technical behavior following a recent pause in its five-day winning streak. After surging to an eight-month high of 166.43 on June 11, the pair has retraced slightly, trading around 165.80 during the Asian trading session on Thursday.
Despite the temporary pullback, the overall trend remains bullish, supported by key technical indicators and the structure of the current ascending channel pattern on the daily chart. The brokers at Aurudium deliver a comprehensive breakdown of this topic in the article below.
Bullish Momentum Holds as RSI Signals Strength
The Relative Strength Index (RSI), a widely followed momentum oscillator, continues to indicate bullish strength in the market. The 14-day RSI remains firmly above the 50 threshold, currently hovering near 58, which is a bullish signal indicating that upward momentum is still in play.
Should the RSI rise toward the 70 mark, the pair could enter overbought territory, signaling an increased risk of technical correction or profit-taking.
This RSI behavior supports the narrative of a sustained bullish bias, which has been prominent over the past several trading sessions. Traders and analysts often interpret readings above 50 as confirmation that buying pressure outweighs selling pressure, especially when paired with other reinforcing technical indicators.
Price Action and Exponential Moving Averages
Another key technical aspect reinforcing the bullish view is the pair’s consistent movement above the nine-day Exponential Moving Average (EMA), currently located at 164.92. This level now acts as the first line of support.
The EMA is often used by traders to identify short-term trend direction, and when the price trades above the EMA, it typically suggests that buy-side momentum is prevailing.
Below this, the 50-day EMA, currently at 163.18, serves as the next key support level. This longer-term moving average gives traders an idea of the intermediate trend, and a decisive drop below this could signal a potential trend reversal or extended consolidation phase.
Should the pair break both the nine-day and 50-day EMAs, bearish momentum could gain traction, opening the door for a move toward the ascending channel’s lower boundary, currently projected around 162.10. Additional support lies at the nine-week low of 160.98, which represents a critical pivot area from which previous rebounds have occurred.
Resistance Levels and Upside Potential
On the upside, the most immediate resistance is the eight-month high of 166.43, a level that served as a short-term top earlier this week. A break and close above this resistance would mark a significant technical development, likely drawing more bullish entries into the market.
Beyond 166.43, the next upside target lies at the upper boundary of the ascending channel, projected near 167.50. This zone could serve as a magnet for price in the short term if bullish momentum intensifies further.
A breakout beyond the channel’s upper boundary could lead to an acceleration of buying, potentially pushing the EUR/JPY cross into new multi-year high territory.
Technical Chart Structure: Ascending Channel in Focus
The EUR/JPY pair has been moving within a well-defined ascending channel, a pattern that typically indicates a progressive uptrend punctuated by intermittent pullbacks. This structure provides traders with a framework to identify key inflection points, particularly along the channel boundaries, which act as dynamic support and resistance levels.
As long as price action remains contained within this ascending channel, the bias remains upward, supported by both momentum indicators and trend-following signals such as EMAs. The structure itself provides valuable insights: pullbacks toward the lower boundary may offer buying opportunities, while approaches toward the upper boundary could signal profit-taking zones or potential reversals.
Outlook: Cautiously Bullish with Watchful Eyes on Key Levels
In summary, while the EUR/JPY pair has slightly eased from its recent high of 166.43, the technical setup remains bullish. The cross continues to trade within an ascending channel, above both the nine-day EMA (164.92) and the 50-day EMA (163.18), while the 14-day RSI points to sustained upside momentum. These conditions suggest that the current pullback may be temporary, and further gains are possible.
Conclusion
The EUR/JPY cross appears to be in a healthy consolidation phase within an established uptrend. Traders will likely continue favoring buy-the-dip strategies, especially if support levels near EMAs hold firm. The pair remains well-positioned for another test of its recent highs and possibly beyond, contingent on technical alignment and macroeconomic confirmation.
