Fundamental Analysis
EURJPY remains near multi-year highs, driven by the divergence between the ECB, maintaining a hawkish tone despite a projected rate cut in June, and the Bank of Japan, which has yet to take aggressive action despite persistent inflation. Additionally, the global rise in yields has further weakened the yen, which continues to suffer from capital outflows due to its low relative return.
According to the May 16 COT report, speculators increased their net long positions in the euro to 53,335 contracts, reflecting expectations of strength while the ECB remains firm ahead of the cut. Conversely, the yen holds net short positions at -122,867 contracts, signalling market skepticism due to the BoJ's inaction. This setup suggests EURJPY’s bullish trend may continue in the coming days unless the BoJ intervenes or adopts a more hawkish stance.
Technical Analysis
EURJPY | H4
Supply zones (Sell): 164.63 (weekly POC)
Demand zones (Buy): 160.23 (weekly POC)
The pair remains bullish and trades within an ascending channel for the past six and a half weeks. The last key daily support is at 161.59, so as long as the price stays above this level, the bullish bias remains valid.
Currently, price is consolidating above the lower boundary of the channel and near this week’s volume concentration zone around 162.84. This suggests potential bullish activation above 163.00, targeting 163.40, 164.00, and last week's supply zone near 164.64.
The bullish scenario would be invalidated if the price breaks below support at 162.41, simultaneously falling under the daily, annual, and weekly opens, and the lower channel boundary. This would open the door for further weakness to challenge 161.59 and signal a possible bullish reversal.
Technical Summary
Bullish scenario: Buys above 163.00, targeting 163.40, 164.00, and 164.64.
Bearish scenario: Sells below 162.60 could aim for supports at 162.41, 162.14, the intraday bearish range at 162.00, and further downside toward 161.59, 161.00, and the weekly buy-side POC at 160.24.
*Exhaustion/Reversal Pattern (ERP): Before entering any trades in key areas, always wait for the formation and confirmation of an ERP on M5 as explained here 👉 https://t.me/spanishfbs/2258
POC Explained
POC = Point of Control: It’s the level or zone where the highest volume concentration occurred. If it previously led to a downward move, it’s considered a selling zone and acts as resistance. Conversely, if it led to an upward move, it’s a buying zone and acts as support.
