EUR/JPY slipped toward 174.75 in early European trading on Monday as the Japanese Yen (JPY) gained ground against the Euro (EUR) on safe-haven demand, driven by concerns over a potential US government shutdown. However, political uncertainty in Japan could limit JPY strength. The upcoming Liberal Democratic Party (LDP) leadership election on October 4 may delay the Bank of Japan’s (BoJ) next rate hike if a dovish candidate prevails.
Technical outlook: bullish bias intact above 174.50
Despite the pullback, EUR/JPY maintains a constructive outlook, holding comfortably above the 100-day Exponential Moving Average (EMA) on the daily chart. Momentum indicators also support the bullish case, with the 14-day Relative Strength Index (RSI) at 63.45, well above the neutral 50 line, signaling room for further gains.
Key resistance is seen at 175.30, the upper boundary of the Bollinger Band. A sustained break above this level could trigger a move toward 175.43, the July 17 high, with further upside potential toward the 176.00 psychological mark.
On the downside, initial support lies at 174.05, the September 23 low. A decisive break below that area could expose 173.48, the September 19 low, followed by the lower Bollinger Band limit near 172.00.
