EUR/JPY recovered earlier losses and traded near 184.40 in European hours on Monday. The daily chart shows sideways movement within an ascending triangle, which points to consolidation. Price is holding above the 50-day Exponential Moving Average and using the nine-day EMA as support. The nine-day EMA remains above the 50-day EMA, while the 14-day RSI is 55.36, staying above 50.

Key Resistance And Breakout Levels

Resistance sits near the top of the triangle around 184.70. A move above the triangle could open the way towards the all-time high of 186.88, set on 23 January. Support is at 184.00, then the nine-day EMA at 183.94. Below that are the 50-day EMA at 183.46 and the triangle base near 182.90. A break below the triangle could tilt conditions lower and bring 180.81 into view. That level marks a nearly four-month low recorded on 12 February. With the EUR/JPY consolidating around 184.40, we see the market coiling within an ascending triangle, which often precedes a significant price move. This technical pattern suggests traders should prepare for a breakout by using options to manage risk and capitalize on the expected increase in volatility. The current setup, holding above the 50-day moving average, maintains a slight bullish advantage.

Options Strategies For A Volatility Breakout

For a bullish continuation, we are watching for a decisive break above the 184.70 resistance level. A move past this point would signal a run towards the January 2026 high of 186.88, making call options with a 185.00 strike price an attractive strategy for the coming weeks. This outlook is supported by recent data showing Eurozone core inflation remained persistent at 2.9% in March 2026, suggesting the European Central Bank may be slower to cut rates than previously thought. Conversely, a failure to hold the triangle could lead to a sharp decline, and we must be prepared for this outcome. A break below the lower trendline at 182.90 would be a strong bearish signal, creating an opportunity to use put options to target the February 2026 low near 180.81. This would represent a significant shift in market sentiment, likely driven by a change in tone from the Bank of Japan. Given the uncertainty of the breakout’s direction, a volatility play could be the most prudent approach. A long straddle, which involves buying both a call and a put option near the current price, would profit from a strong move in either direction. This strategy is ideal as the pair’s Average True Range (ATR) has been contracting, indicating a breakout is becoming more likely. The underlying fundamentals still favor a strong euro over a weak yen, a trend we saw dominate markets throughout 2025. The Bank of Japan has only just begun to normalize its policy, while the ECB maintains a significant rate advantage, making the carry trade a persistent source of support for the pair. Therefore, any dips toward the lower end of the triangle might be viewed by the broader market as a buying opportunity. Create your live VT Markets account and start trading now.

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