Facts:
- EURJPY approaches resistance which has twice led to reversal
- Oscillators are slowly showing signs of exhaustion
- The market is still pricing in three interest rate cuts in the Eurozone and one rate hike in Japan by the end of 2025.
Recommendation:
- Transaction: Short position on EURJPY at the market price.
- Target: 157.100
- Stop: 161.670
Opinion:
EURJPY has reached a significant technical resistance level that has triggered two previous reversals, presenting an opportune moment to establish short positions. This resistance coincides with clear signs of momentum exhaustion in key oscillators.
The fundamentals strongly support this technical setup through diverging monetary policies. While the ECB is projected to cut rates three times by end-2025 amid Eurozone stagnation, the BOJ has made a decisive hawkish pivot with Governor Ueda signaling two additional rate hikes this year. That is why we recommend a short position, targeting a level below the 23.6% Fibonacci retracement, with a stop set at the 200-day SMA, which has been a long-term resistance.
