EUR/JPY Price Analysis: Buyers target 131.00 on the back of rising US bond yields

• EUR/JPY sustains gains for the six-consecutive day.
• Rising US bond yields underpin the EUR/JPY pair.
• The daily and the 4-hour chart supports the bullish bias.
• RSI in the 4-hour chart almost at oversold levels caution is warranted.

The EUR/JPY advances for the sixth day in a row, trading at 130.38, posting decent gains of 0.08% at the time of writing. The market sentiment is downbeat, as Asian equity futures look poised to open in the red, except for the Japanese Nikkei 225 and the Chinese Hang-Seng, up 0.11% and 0.37%, respectively.

The cross-currency has been underpinned by rising US bond yields. The US 10-year benchmark note rate finished the New York session at 1.564%, increasing five basis points (bps).

EUR/JPY Price Forecast: Technical outlook

Daily chart

The EUR/JPY is trading above the September 10 high, which lies at 130.27. The 50 and the 200-day moving averages (DMA’s) remain well below the spot price, suggesting EUR/JPY upside bias. On the way up, the first resistance level would be the 100-DMA, sitting at 130.82. A break of the latter would expose the July 13 high at 131.08. In case of a breach of that level, the following supply zones would be the psychological 132.00, followed by the July 1 high at 132.43.

On the flip side, the EUR/JPY sellers will need to reclaim the 200-DMA at 129.71 to resume the downside bias.

The Relative Strength Index is at 59.50, slightly flat, though supporting the upside bias, as it remains above the 50-midline.

4-hour chart

The EUR/JPY will find strong resistance around the 130.69-80 level. 

A break of the range could pave the way for further gains. The first supply zone would be the July 30 swing highs around 131.08.

However, failure at the latter could pave the way for a retracement towards 130.19, followed by a challenge of 130.00

The Relative Strength Index is at 68, heading up, supporting the upside bias. Nevertheless, caution is warranted as the EUR/JPY RSI’s approaches oversold levels.

ADDITIONAL LEVELS TO WATCH