Momentum Signals And Near Term Bias
RSI has slipped back towards 50, pointing to softer upside momentum. It does not yet point to clear bearish pressure while price holds above nearby support. Resistance sits at the nine-day EMA of 183.91, then the triangle cap near 184.60. A move above that area could open a route towards the record 186.88, set on 23 January. Support is first seen at the 50-day EMA at 183.37, then the triangle base around 182.50. A break below this zone may bring 180.81 back into view, the three-month low from 12 February. The technical analysis for this report used an AI tool.Trade Setup And Key Levels
We see the EUR/JPY cross is holding above key moving averages, suggesting the broader uptrend is still in play despite some weakening momentum. The pair is consolidating within an ascending triangle, which often precedes a significant price move. This presents an opportunity to position for a potential breakout by buying on dips toward support. The fundamental picture supports a stronger Euro against the Yen, reinforcing the technical bias. Recent preliminary data shows Eurozone inflation for March 2026 holding firm at 2.7%, putting pressure on the European Central Bank to delay any potential rate cuts. This policy stance should keep the Euro supported in the near term. Meanwhile, the Bank of Japan remains cautious, having recently signaled that the pace of any further policy tightening will be slow due to sluggish wage growth figures. This policy divergence between a relatively hawkish ECB and a dovish BoJ creates a favorable environment for the EUR/JPY to appreciate. This is a dynamic we have seen before and can use to our advantage. For traders with a bullish outlook, we should consider buying call options or establishing bull call spreads if the price dips to and holds the 50-day EMA support at 183.37. The initial target for such a trade would be a test of the triangle’s upper boundary around 184.60. A clean break above this level could see a rapid move toward the January high. From our vantage point in 2025, we can recall the powerful multi-month rally in 2023 when similar central bank policy differences fueled a gain of over 15% in the pair. The current macroeconomic setup feels reminiscent of that period, suggesting the path of least resistance remains to the upside. This historical precedent gives us confidence in the current long bias. However, we must manage risk, as the fading RSI indicates the bullish conviction is not absolute. A decisive break below the triangle’s lower boundary at 182.50 would invalidate the immediate bullish thesis. In that scenario, we would pivot to buying put options, targeting the February low near 180.81. Given the consolidating pattern, implied volatility on options might be relatively low, presenting another opportunity. We could consider buying straddles to profit from a significant price move in either direction. This strategy would be particularly effective if a breakout from the triangle pattern occurs in the coming weeks. Create your live VT Markets account and start trading now.
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