EUR/JPY Maintains Bullish Momentum Near 172.80, But Overbought RSI Flags Caution

EUR/JPY Maintains Bullish Momentum Near 172.80, But Overbought RSI Flags Caution

The EUR/JPY currency cross is trading higher around 172.80 in Friday's early European session, as the Japanese Yen weakens further amid diminished Bank of Japan (BoJ) rate hike expectations.

Yen Weakens as Japan's CPI Poses Policy Dilemma

Japan’s National Consumer Price Index (CPI) highlights the policy conundrum faced by the BoJ, as rising inflation pressures clash with concerns over economic fragility—especially in light of renewed US tariff risks. These factors make it harder for the BoJ to confidently proceed with tightening monetary policy, weakening the Yen in the process.

Technical Outlook: Bullish Above 100-Day EMA, But RSI Signals Fatigue

Technically, EUR/JPY’s bullish bias remains intact, supported above the 100-day Exponential Moving Average (EMA) on the daily chart. This reinforces the medium-term uptrend and offers a positive signal for bulls.

However, the 14-day Relative Strength Index (RSI) is currently hovering near 70.50, entering overbought territory. While not immediately bearish, this indicates neutral momentum and suggests a potential short-term consolidation or pullback before any continuation higher.

• Immediate resistance is seen at 173.25
• First support lies around 170.00

Outlook: Room for Upside, But Watch RSI and Yen Developments

With bullish structure intact and the BoJ expected to delay further hikes, EUR/JPY could test higher levels if resistance at 173.25 breaks. That said, the overbought RSI condition requires traders to exercise caution, as a mild correction could precede any renewed upside momentum.