EUR/JPY Price Analysis: Retreats amid speculation of BoJ hike, technicals signal potential downside
- EUR/JPY faces a 0.17% decline as Japan's core inflation rise hints at a possible end to negative interest rates.
- Technical patterns, including a 'bearish harami', suggest further downside, with key levels to watch at 162.56 and 162.00.
- Recovery above 163.00 could open the path to 164.00, contingent on overcoming resistance near the week's high at 163.72.
The EUR/JPY is dropping late in the North American session, set to register losses of around 0.17% on Tuesday. A rise in core inflation in Japan sparked speculation that the Bank of Japan (BoJ) could increase interest rates, ending the negative interest rate cycle. Therefore, the cross-pair trades at 163.22 after hitting a daily high of 163.52.
EUR/JPY Price Analysis: Technical outlook
From a technical standpoint, the EUR/JPY failed to extend its rally and edged lower. Nevertheless, price action is well contained within the boundaries of Monday’s price action, which would form a ‘bearish harami’ candlestick chart pattern, suggesting that further downside is expected.
If the EUR/JPY tumbles below 163.00 and decisively breaks below the February 26 low of 162.56, that would exacerbate a test of the 162.00 mark, but on its way south, sellers will face the Tenkan-Sen at 162,31.
Conversely, if buyers keep the exchange rate above 163.00, the EUR/JPY could edge higher above the current week's high at 163.72, which could pave the way for testing the 164.00 mark.
EUR/JPY Price Action – Daily Chart
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
