EUR/JPY is encountering resistance near 155.80 as it enters Tuesday’s European session, retracing from its recent rebound after reaching a one-week high yesterday.
The previous bounce from the intraday low is not gaining significant traction, with the 21-day moving average (DMA) and a bearish Doji candlestick formation from Monday’s daily chart acting as deterrents for buyers.
The bearish signals from the Moving Average Convergence Divergence (MACD) indicator and the relatively stable Relative Strength Index (RSI) at 14 further reinforce the downside bias for the EUR/JPY pair.
As a result, it is expected that EUR/JPY prices will likely remain below the psychological level of 156.00 and potentially decline towards the recent low at around 153.40, which was recorded last week.
Nevertheless, there is a formidable support line, which has been in place since early April and currently stands at approximately 152.85. Breaking this support level could push the pair further down, targeting the May peak around 151.60.
Conversely, even if there is a daily close above the resistance posed by the 21-DMA at around 156.30, it does not guarantee a bullish rally for EUR/JPY. There is a three-week-long horizontal resistance zone in the vicinity of 156.70-90, followed swiftly by the key level of 157.00, which will pose challenges for the bulls before granting them control.
In such a scenario, market attention will shift to the yearly high reached in June around 158.00, and subsequently, the psychological level of 160.00 will come into focus.
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