EURJPY Extends Rally, Reaches New Record High

EURJPY continues its upward trend, extending its steep rise for the sixth consecutive day and surpassing the 171 mark in early Monday trading. Despite overbought conditions and signals from Japanese authorities about possible intervention to support the weakening yen, bulls maintain strong control. The yen has been under increased pressure following the Bank of Japan’s dovish stance in its last meeting.

The pair is on track for its first monthly close above the psychological 170 level. Last week’s significant gains and the completion of a bullish engulfing pattern on the weekly chart, along with a long tail on last week’s candle, add to the positive outlook.

However, caution is warranted as initial warnings about a potential stall in the rally cannot be ignored. Technical indicators show overbought conditions on both daily and monthly charts, with a noticeable loss of bullish momentum, though firmer signals are yet to be seen.

Until clearer signals emerge, the bullish stance remains, but with increased caution and tightened stops. The breached 170 level and the former 2008 record high of 169.95 have turned into solid supports, reinforced by the nearby converging 20/10 DMAs at 169.65/60. A loss of these levels would generate a stronger bearish signal and could lead to a deeper pullback.

Res: 171.50; 172.00; 172.20; 172.96
Sup: 171.00; 170.60; 170.00; 169.60