EURJPY has bounced sharply off the 183.13 swing low and is now testing the 50% Fibonacci retracement level at 184.92, drawn from the 186.37 high to the recent bottom.
This zone might be enough to cap the bullish pullback, especially since price recently poked above it before settling back near this mark. A larger correction could still reach the 61.80% Fib at 185.13, which lines up closely with the declining 100 SMA, potentially serving as the line in the sand for the bullish recovery.
If buyers manage to clear this confluence zone, EURJPY could resume its climb toward the 100% Fib near 186.37 or higher, retracing the bulk of the recent selloff.
A break back below the 38.20% level at 184.37, on the other hand, could open the door for a return to the 183.139 low or lower, especially if broader risk sentiment sours again.
The 100 SMA remains above the 200 SMA for now, though the gap between the two has narrowed considerably, and price has already pierced through both moving averages during the recent decline. With the pair currently testing the underside of the 100 SMA, this dynamic level could flip into resistance unless bulls can secure a decisive close above it.
Stochastic has climbed out of oversold territory and is pushing toward the overbought zone, reflecting the strength of the recent bounce. The oscillator’s rapid ascent suggests buyers currently have the upper hand, though a turn lower from these elevated levels could signal that the recovery is running out of steam.
RSI is also trending higher and approaching its own overbought threshold, confirming the shift in momentum. Some room remains before the indicator reaches extreme levels, so price could keep climbing while buyers stay in control, though a divergence or stall near current resistance zones would warrant caution for trend continuation.
EURJPY could continue to take cues from ECB commentary, as some members have reiterated the need for higher borrowing costs to combat inflation.
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