This euro pair is hanging out at the very top of its range on the 4-hour time frame, still deciding whether to go for a bounce or a break.
Check out these inflection points on my radar!
EUR/JPY 4-hour Forex Chart by TradingView
After zooming up early this month, EUR/JPY got stuck in consolidation right below the 163.50 minor psychological mark.
As it turns out, this happens to be the very top of its longer-term range that had been holding since mid-September. So will it continue to keep gains in check?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Just last week, the European Central Bank (ECB) announced its decision to lower borrowing costs by 0.25% while giving a slightly downbeat outlook for economic performance.
The region’s flash PMI readings lined up this week could confirm whether or not further policy easing is in the cards, potentially steering euro pairs in a clearer direction.
The 100 SMA is above the 200 SMA to hint that the path of least resistance is to the upside, but keep an eye out for a break below the faster-moving SMA near S1 (161.70) to gauge if bearish vibes are picking up.
If that’s the case, EUR/JPY could set its sights on the next downside targets at S3 (159.95) near a major psychological mark or S5 (158.05) close to the October lows.
On the other hand, a break above the range top at R1 (163.45) could set off a move to the next bullish target at R2 (164.40) or higher, so better stay on your toes!
Don’t forget to keep tabs on this week’s set of top-tier news events, as well as any headlines that could impact market sentiment, when taking any trades.