EUR/JPY Strength to Persist as RSI Holds in Overbought Zone

EUR/JPY retraces the decline from earlier this week to trade to a fresh yearly high (155.75), and the exchange rate attempt to test the September 2008 high (159.61) as the Relative Strength Index (RSI) holds in overbought territory.

EUR/JPY Rate Outlook

EUR/JPY initiates a fresh series of higher highs and lows as the Japanese Yen depreciates against most of its major counterparts, and the exchange rate may continue to trade to fresh yearly highs as long as the RSI holds above 70.

A break/close above the 157.20 (161.8% Fibonacci extension) to 157.90 (161.8% Fibonacci extension) region may push EUR/JPY towards the September 2008 high (159.61), with the next area of interest coming in around 160.40 (100% Fibonacci extension).

Nevertheless, failure to test the 157.20 (161.8% Fibonacci extension) to 157.90 (161.8% Fibonacci extension) region may generate an RSI sell signal, with a move below 70 in the oscillator like to be accompanied by a decline in EUR/JPY like the price action from earlier this year.

A move below 154.90 (61.8% Fibonacci extension) brings 153.30 (50% Fibonacci extension) back on the radar, with the next area of interest coming in around 151.60 (38.2% Fibonacci extension).