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Yen losing momentum, further downside looks favourable

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The Yen was losing momentum near EURJPY 162.75 during European trading on Tuesday, amid growing speculation that the Bank of Japan might intervene in the foreign exchange market to support the Japanese currency in the near term.

Early Tuesday, Japanese Finance Minister Shunichi Suzuki said that he would not rule out any steps to respond to disorderly moves and that he will monitor foreign exchange moves with a high sense of urgency.

From a technical perspective, the bearish outlook of EURJPY remains intact as the cross is below the 50- and 100-period exponential moving averages (EMA) on the four-hour chart. The relative strength index (RSI) lies in bearish territory around 36.40, supporting the sellers for the time being.

The first upside barrier for EURJPY will emerge near the 100-period EMA at 163.15. Further north, the next target is seen at the 50-period EMA at 163.32.

A decisive break above the latter will expose the upper boundary of the Bollinger Band at 163.58. Any follow-through buying above this level would sustain its bullish move to a high of March 27 at 164.41.

On the flip side, the lower limit of the Bollinger Band at 162.65 acts as an initial support level for the cross. The key contention level is at the 162.00 mark, representing a low of March 19 and a psychological level. A breach below 162.00 will see a drop to a low of March 14 at 161.10.

(Source: OANDA)