EUR/JPY moves swiftly up near familiar support

EURJPY picked up steam on the back of news that Germany plans to inject hundreds of billions into defense and infrastructure investments, rapidly approaching the 160.00 mark after bouncing off the well-tested 155.50 support level.

Currently, the pair is setting its sights on the 50-day simple moving average (SMA) at 160.30 and the psychologically significant 161.00 level. A decisive close above this region could pave the way for a challenge of the resistance trendline at 162.70 and the 200-day SMA at 163.20. However, for a true bullish trend reversal to materialize, the rally would need to convincingly extend beyond 165.00.

Momentum indicators suggest further upside in the near term. The RSI is strengthening above the neutral 50 mark, and the MACD is widening its gap above the red signal line – both encouraging signs for buyers. That said, the stochastic oscillator’s entry into overbought territory hints at a possible consolidation phase before the next move.

On the downside, if the bears regain control, initial support may emerge near the 20-day SMA around 157.70, followed by the well-established 155.55 base. A break below the latter could put sellers back in the driver’s seat, with 154.37 – the area that has acted as a buffer multiple times in the past two years – standing as the next line of defense. A failure to hold there might clear the way towards the 151.00 level.

Overall, EURJPY appears poised to maintain its positive momentum in the short term, but whether this recovery can evolve into a sustained bullish breakout remains to be seen, as key obstacles continue to loom ahead.