During the early European session on Friday, the EUR/JPY cross experienced a downturn for the second day in a row. The prevailing risk-off sentiment, driven by an escalation of geopolitical tensions in the Middle East, has bolstered the appeal of safe-haven currencies such as the Japanese Yen (JPY), creating headwinds for the EUR/JPY cross. As of now, the cross is trading near 159.30, marking a 0.15% decline for the day.
From a technical perspective, the bullish momentum of EUR/JPY remains intact, with the cross maintaining its position above the crucial 100-hour Exponential Moving Averages (EMA) on the four-hour chart. The 14-day Relative Strength Index (RSI) further supports the upward trajectory, residing above the 50 midline, suggesting a prevailing path of least resistance to the upside.
The primary hurdle for EUR/JPY is anticipated around the psychological round mark of 160.00, corresponding to the high recorded on January 10. A sustained surge beyond this level could lead to an upswing towards the upper boundary of the Bollinger Band at 160.62. Beyond that, the next resistance level is identified near the high of December 1, standing at 161.77.
Conversely, on the downside, the initial support level for EUR/JPY is positioned near the high observed on January 4, at 158.60. Additional downside protection comes in the form of the 50-EMA at 158.25, followed by the 100-EMA at 157.82. A breach of this support zone could pave the way for a descent towards the lower limit of the Bollinger Band at 157.09.
