Yen. Image Source: Pixabay

• The EUR/JPY currency pair climbed for the second straight day on Friday, breaking above the 158.92 level. However, it closed at 158.74.
• The Bank of Japan's ultra-loose monetary policy put pressure on the Japanese yen, while positive EU data reduced the possibility of a rate hike by the ECB.
• Technical analysis illustrates the potential for further gains, with the year-to-date high at 159.76 as the next target for buyers.

The EUR/JPY currency pair climbed for the second straight day on Friday, breaking above Thursday’s high of 158.92. However, it then retreated some and printed a daily close of 158.74, registering gains of 0.19%.

The fundamental backdrop has not changed, as risk aversion was the price action driver during the week, while the Bank of Japan’s (BoJ) commitment to its ultra-loose monetary policy put pressure on the Japanese yen.

Meanwhile, the Eurozone’s more positive economic data seemingly pushed aside the likelihood of a European Central Bank (ECB) rate hike, but the euro may not be out of the woods yet. Recessionary fears continue to loom, along with inflation twice the ECB’s target, which have increased speculations for a stagflationary scenario.

From a technical perspective, the EUR/JPY pair's lack of clear direction kept the pair trading sideways, though slightly tilted to the upside. If the cross-pair breaks above the 159.00 level, buyers could test the year-to-date high at 159.76.

Conversely, if EUR/JPY sellers were to move in, the first support would be the 158.00 figure, immediately followed by the top of the Ichimoku Cloud (Kumo) at 157.75/95. Once cleared, the cross would drip inside the Kumo, indicating sellers gathering momentum, with the next support seen at the Tenkan Sen at 157.85, followed by the Kijun-Sen at 156.64.

EUR/JPY Price Action – Daily Chart

(Click on image to enlarge)

EUR/JPY Technical Levels

More By This Author: