The EUR/JPY pair is displaying topsy-turvy moves in a narrow range around 142.55 in the early Tokyo session. The cross is likely gathering strength for further upside as the European Central Bank (ECB) would be continued with bigger rates spell to sharpen its monetary tools in the battle against Eurozone’s sticky inflation.
ECB President Christine Laragde cited that inflation in Eurozone will be higher for a longer period. The statement is backed by higher wage prices and prolonged supply-chain disruptions amid more than a year longer Russia-Ukraine war.
Meanwhile, the banking sector crisis amid the demise of Credit Suisse has spooked the sentiment of institutional investors. Eurozone-ZEW Survey, released on Tuesday, reported a sheer decline to 10.0 after an appreciating spell of five months.
On the Tokyo front, Japanese Chief Cabinet Secretary Hirokazu Matsuno has promised to allocate more than 2 trillion yen from reserves to safeguard households from rising prices, as reported by Reuters. The relief package move would stimulate the overall liquidity in the economy and might support in keeping inflation steady near the desired rate.
EUR/JPY has shown a reversal after sensing buying interest around the horizontal resistance-turned-support plotted from March 17 high at 142.22.
Upward-sloping 21-period Exponential Moving Average (EMA) at 142.22 indicates more upside ahead.
Adding to that, the Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, which indicates that the upside momentum is already active.
Should the asset breaks above March 21 high at 142.79, Euro bulls would drive the cross toward March 09 low around 144.00 followed by March 15 high at 145.00.
On the flip side, a downside break below March 20 high at 141.76 would drag the cross toward March 13 low at 139.48. A slippage below the same would expose the asset to January 19 low around 138.00
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