The EUR/JPY currency pair finds itself under pressure during the early European session on Friday as geopolitical tensions in the Middle East weigh on market sentiment. The Japanese Yen (JPY), a safe-haven currency, gains ground amid the escalating tensions, acting as a counterforce to the EUR/JPY cross. As of the latest trading data, the pair is hovering near 159.30, marking a 0.15% decline for the day.
Technical Outlook
From a technical standpoint, EUR/JPY maintains a positive outlook, supported by several key indicators. The cross remains above the crucial 100-hour Exponential Moving Average (EMA) on the four-hour chart, signaling ongoing bullish momentum. Additionally, the 14-day Relative Strength Index (RSI) stands comfortably above the 50 midline, indicating that the path of least resistance is to the upside.
Key Resistance Levels
The primary resistance level that traders are eyeing is the psychological round mark at 160.00. A sustained break above this level could pave the way for a rally towards the upper boundary of the Bollinger Bands at 160.62. Beyond that, the next significant upside barrier looms near the high observed on December 1 at 161.77.
In case of a downside move, the initial support level for EUR/JPY is positioned around the high recorded on January 4 at 158.60. Additional downside protection can be found at the 50-EMA, situated at 158.25, followed by the 100-EMA at 157.82. A breach of these levels might lead to a further decline towards the lower boundary of the Bollinger Bands at 157.09.
EUR/JPY faces a critical test at the 160.00 mark, with geopolitical tensions in the Middle East influencing market sentiment. While the pair maintains a bullish outlook, traders will closely monitor the key resistance levels mentioned above for potential breakout opportunities. Conversely, the outlined support levels will act as critical barriers in case of a reversal in sentiment.
