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EUR/JPY Price Analysis: Extends rise above 166.50 amid overbought condition

  • EUR/JPY gains traction near 166.85 on Thursday, the highest level since 2008.
  • The crossover maintains the bullish vibrations, with the RSI overbought condition.
  • The first resistance level will emerge at 166.82; the initial support level is located at 165.35.

EUR/JPY trades in positive territory for the fifth consecutive day during the first hours of European trading on Thursday. The cross rises to 166.85, its highest level since 2008. The Tokyo Consumer Price Index (CPI) for April will be released on Friday, ahead of the Bank of Japan's (BoJ) interest rate decision. Markets expect the Japanese central bank to keep its policy rate and the amount of bond purchases unchanged, as the BoJ raised interest rates in March for the first time since 2007. The rate divergence between Japan and the Eurozone is the key factor that weighs down the Japanese Yen (JPY) against the Euro (EUR).

From a technical point of view, EUR/JPY maintains the bullish trend unchanged on the four-hour chart, as the cross is above the upward-sloping 50- and 100-period Exponential Moving Averages (EMA). The Relative Strength Index (RSI) remains in bullish territory above 70. However, the overbought condition of the RSI indicates that further consolidation cannot be ruled out before positioning for any near-term EUR/JPY appreciation.

The first bullish barrier to the crossover will emerge near the upper boundary of the Bollinger Bands at 166.82. The next hurdle lies at the psychological level of 167.00. A bullish break above this level will lead to a rally to the 2007 yearly high of 168.95, on track for an all-time high of 169.78 in July 2008.

On the opposite side, the initial support level for the crossover sits near a March 20 high at 165.35. Further south, the next containment level to watch is the 50 EMA at 165.11, followed by the 100 EMA at 164.62. Breaking this level will result in a drop to the lower boundary of the Bollinger Bands at 164.30.

EUR/JPY four-hour chart

EUR/JPY

Panorama
Today's Latest Price 166.77
Today's Daily Change 0.57
Today's Daily Change % 0.34
Today's Daily Opening 166.2
Trends
20 Daily SMA 164.31
SMA of 50 Daily 163.35
SMA of 100 Daily 160.95
SMA of 200 Daily 159.84
Levels
Previous Daily High 166.23
Previous Daily Low 165.4
Previous Weekly High 165.03
Previous Weekly Low 162.67
Previous Monthly High 165.36
Previous Monthly Low 160.22
Daily Fibonacci 38.2% 165.91
Daily Fibonacci 61.8% 165.72
Daily Pivot Point S1 165.65
Daily Pivot Point S2 165.11
Daily Pivot Point S3 164.82
Daily Pivot Point R1 166.49
Daily Pivot Point R2 166.78
Daily Pivot Point R3 167.32

Source: Fx Street

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