EUR/JPY trades on a softer note near 161.30 amid the growing possibility of a March rate hike from the BoJ.
The cross maintains the bearish tone below the key EMA; RSI momentum indicator lies below the 50-midline.
The first upside barrier is seen at 161.65; the initial support level for the cross is located at 160.87.
The EUR/JPY cross edges lower to 161.30 during the early European session on Wednesday. Most companies have agreed to offer sizeable pay increases at annual talks with trade unions, paving the way for the Bank of Japan (BoJ) to end negative interest rates as early as next week. This, in turn, lifts the Japanese Yen (JPY) and creates a headwind for the EUR/JPY cross.
According to the four-hour chart, EUR/JPY keeps the bearish vibe unchanged as the cross holds below the 50- and 100-period Exponential Moving Averages (EMA). Furthermore, the Relative Strength Index (RSI), which lies below the 50-midline, supports the sellers for the time being.
The key upside barrier for EUR/JPY will emerge at the confluence of the upper boundary of the Bollinger Band and the 50-period EMA at 161.65. Further north, the next hurdle is seen at the 100-period EMA at 161.85. Any follow-through buying above this level will see a rally to a high of March 8 at 162.17, followed by a high of March 6 at 162.95.
On the other hand, the initial support level for the cross is located at a low of March 12 at 160.87. The next contention level is seen at the lower limit of the Bollinger Band 160.25. The additional downside filter to watch is a psychological round mark at 160.00
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