EURJPY is currently testing a confluence of support levels that could determine whether the pair continues its longer-term upward trajectory or succumbs to renewed selling pressure in the sessions ahead.
The currency pair has retreated to test the ascending trend line support that has been instrumental in guiding the advance since early August. This black trend line coincides with the 172.00 area of interest around a major psychological mark, creating a technically significant zone where buyers have historically stepped in to defend the bullish structure.
Should this support confluence hold firm, EURJPY would be well-positioned to target the Fibonacci extension levels that mark key upside objectives. The 38.2% extension sits at 173.137, followed by the 50% level at 173.462.
A sustained breakout above these initial targets could pave the way toward the more ambitious 61.8% extension at 173.787, with the full extension target located near 174.190 representing the ultimate bullish objective.
Moving average dynamics remain constructive for the bulls, with the red and blue trend lines providing dynamic support below current price action. The ascending nature of these indicators confirms that the path of least resistance continues to favor the upside, provided the trend line support holds.
Stochastic readings have retreated from overbought territory and are currently hovering in neutral ground, suggesting the oscillator has room to climb should buying interest resurface. This positioning indicates that bullish momentum could quickly return if support levels prove effective.
RSI indicators show similar characteristics, having pulled back from elevated levels but maintaining a constructive bias that supports potential upside moves from current support zones.
The pair continues to benefit from euro strength against the yen, as expectations of a more hawkish European Central Bank statement and political uncertainty in Japan providing tailwinds. The upcoming ECB decision could bring volatility for the remainder of the week while risk flows could also impact the safe-haven JPY.