Rallies as a bullish engulfing pattern emerges, bulls target 157.00

• EUR/JPY gains traction, rising to 156.47, as JPY weakens in a quiet Eurozone and Japanese economic setting.
• For sustained upward momentum, EUR/JPY buyers need to surpass the Tenkan-Sen and 157.00 resistance levels.
• Sideways trading likely if pair remains below 157.00, with potential support at 153.85 and December low of 153.11.

The EUR/JPY bounced off Tuesday’s lows of 155.06, and rallied more than 0.70% during Wednesday’s session, trading at 156.47, as the Japanese Yen (JPY) began the year on the back foot. A scarce economic docket in the Eurozone (EU) and Japan would likely leave traders adrift to market sentiment swings in the first trading week of the year.

The cross-pair remains neutral to downward biased despite registering a leg-up on Wednesday, exacerbated by a bullish-engulfing candle pattern. Nevertheless, buyers must reclaim the Tenkan-Sen at 156-72, followed by the 157.00 mark, if they want to remain hopeful of higher prices in the EUR/JPY pair. In that outcome, the EUR/JPY’s next resistance would be the Kijun-Sen at 158.02. A breach of the latter will expose the Senkou Span B at 158.71.

On the flip side, if sellers keep prices below 157.00, the pair will remain trading sideways, within the 155.00-156.70 mark. Once the bottom of the range is broken, the first support would emerge at 153.85, the December 14 low, followed by the latest cycle low at 153.11, reached on December 7.

EUR/JPY Price Action – Daily Chart

EUR/JPY Technical Levels