EUR/JPY Price Forecast: Softens to near 178.50, retains bearish bias despite oversold RSI
The EUR/JPY cross trades in negative territory near 178.50 during the early European trading hours on Wednesday.
EUR/JPY forex rate tumbles to near 178.50, yet maintains a bearish outlook despite an oversold Relative Strength Index (RSI). This downward trend follows hawkish remarks from Bank of Japan (BoJ) policymakers, who suggest the central bank may increase interest rates this month. BoJ's Takata stated a potential 25-basis-point hike, hinting at a potential 1.25% rate hike - its highest level in approximately 31 years.
Strategists at Rabobank caution that the JPY's role as a funding currency may face challenges as markets assess the potential acceleration of JPY shorts. EUR/JPY's daily chart shows the currency pair persistently below key moving averages, indicating a bearish short-term trend. The RSI stands at 22, deep in oversold territory, suggesting the downward momentum may face resistance if sellers fail to push the price further.
The next resistance level is at 179.00, with a break-through required to alleviate downward pressure. A move below 177.17 could open the door to a lower low at 176.09, followed by a potential dip to October's 175.35 low.
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