EUR/JPY Outlook: Gains Above 184.00 Tempered by Bearish Technical Signals and Geopolitical Tension

During the early European session on Monday, the EUR/JPY cross traded in positive territory near 184.20. However, upside potential appears constrained as market participants remain cautious regarding a fragile ceasefire between the US and Iran.

Following a weekend of diplomatic friction, both nations have agreed to pause hostilities and convene in Qatar this Tuesday. This geopolitical uncertainty may weigh on risk-sensitive assets, such as the Euro, relative to the Japanese Yen.

Additionally, the Yen may find support from fears of Japanese market intervention. Japan’s Chief Cabinet Secretary, Minoru Kihara, noted last week that authorities are prepared to take appropriate action against excessive foreign exchange volatility if necessary.

In the Eurozone, market attention is shifting toward the European Central Bank’s (ECB) annual forum this week. As traders navigate stock market volatility and declining oil prices, any hawkish commentary from ECB President Christine Lagarde during her Monday opening remarks could provide a floor for the Euro in the near term.

Technical Analysis:

On the daily timeframe, EUR/JPY maintains a bearish short-term bias, trading below both the 100-day moving average and the Bollinger middle band. This cluster of resistance currently caps price action, while the Relative Strength Index (RSI 14) sits at 42.65, suggesting waning bullish momentum rather than oversold conditions.

Immediate support is located at the lower Bollinger band near 183.55, which serves as the first significant demand zone. A decisive break below this level could trigger a deeper correction. Conversely, a daily close above the 100-day moving average at 184.55 is required to shift momentum, potentially opening the path toward the middle band at 184.95 and eventually the upper band at 186.35.

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