EUR/JPY trades on a softer note around 163.05 in Wednesday’s early European session.
The positive outlook of the cross remains intact above the key EMA; RSI indicator supports the bullish momentum.
The immediate resistance level is seen at 163.21; the key support level is located at the 162.60–162.70 zone.
The EUR/JPY cross finds support above the 163.00 psychological figure during the early European trading hours on Wednesday. The upbeat Japanese inflation data for January surprised the upside and sparked speculation that the Bank of Japan (BoJ) will exit negative interest rates by June this year. This, in turn, lifts the Japanese Yen (JPY) and weighs on the EUR/JPY cross. The cross currently trades near 163.05, down 0.09% on the day.
Technically, EUR/JPY maintains the bullish bias unchanged as the cross holds above the 50- and 100-period Exponential Moving Averages (EMA) on the four-hour chart. The upward momentum is supported by the Relative Strength Index (RSI), which lies above the 50-midline, indicating the path of least resistance is to the upside.
A high of February at 163.21 acts as an immediate resistance level for EUR/JPY. Further north, the upper boundary of the Bollinger Band at 163.60 will be the next upside barrier. A bullish breakout above this level will pave the way to a psychological mark at 164.00.
On the flip side, the crucial support level will emerge at the 162.60–162.70 region, portraying the confluence of the lower limit of the Bollinger Band and the 50-period EMA. The additional downside filter to watch is the 100-period EMA at 161.90. The next contention level is seen at a low of February 15 at 160.91, followed by a low of February 12 at 160.38
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