Stays defensive above the 155.00 area, ECB, BoJ eyed

• EUR/JPY holds below the 50- and 100-hour EMAs on the one-hour chart.
• The immediate resistance level is located at 155.40; 154.90–155.00 is the crucial support zone.
• Investors await the European Central Bank (ECB) and Bank of Japan (BoJ) decisions.

The EUR/JPY pair loses momentum and remains on the defensive above 155.00 in the Asian session. Market participants await the outcome of the European Central Bank (ECB) and Bank of Japan (BoJ) meetings scheduled for Thursday and Friday. 

The ECB is expected to raise interest rates by 25 basis points (bps) on Thursday. Market participants speculate that the ECB will raise borrowing costs in July and September to bring inflation back to target. The concern about the economic slowdown in the Eurozone exerts pressure on the Euro against its rivals. However, ECB President Christine Lagarde will offer hints about further monetary policy and might allow the Euro to stay firmer.

On the other hand, BoJ Governor Kazuo Ueda put an end to speculation of a Yield Control Curve policy change and said that there was still some way to go before reaching the 2% inflation target. Japanese policymakers are likely to maintain an ultra-easy monetary policy on Friday. This, in turn, might lead to the weakening of the Japanese Yen against its major rivals due to monetary policy divergences.

According to the one-hour chart, EUR/JPY holds below the 50- and 100-hour Exponential Moving Averages (EMAs), which means further downside looks favorable. Meanwhile, the Relative Strength Index (RSI) stands below 50, within bearish territory, suggesting that sellers will likely retain control soon.

Therefore, the cross could meet the immediate resistance level of 155.40 (50-hour EMA), followed by 155.50 (100-hour EMA). The additional upside filter to watch is 155.75 (High July 26). The 156.00 area appears to be a tough nut to crack for EUR/JPY.

On the flip side, any extended weakness below the 154.90–155.00 zone (a psychological round mark and low of July 27) will challenge the initial support level of 154.50 (Low of July 14). Further south, the cross will see a drop to 154.00, highlighting a psychological round figure and a low of July 13.

EUR/JPY one-hour chart