Bearish Momentum Could Extend from a Triple Top Formation

Manuel

Summary:

EUR/JPY reached a local high of 164.07 in a volatile trading session, marking the third rejection from this level.

SELL EURJPY

Close Time

CLOSED

161.364

Entry Price

158.200

163.450

186.634 +0.641 +0.34%

86.7

Pips

Profit

158.200

160.497

Exit Price

161.364

Entry Price

163.450

European Central Bank (ECB) board member Isabel Schnabel stated on Wednesday that trade fragmentation is structurally detrimental to both economic growth and inflation.

Earlier in the day, ECB President Christine Lagarde commented on tariffs during an interview with Ireland’s Newstalk radio. She warned that tariffs would have negative global implications, with the severity and duration of the impact varying depending on factors such as scope, targeted products, and the length of time they remain in place.

"There is far less enthusiasm for investing in the United States at the moment," Lagarde added. "It’s better to pause and hold investments until there is more certainty."

Meanwhile, ECB policymaker Olli Rehn underscored that trade protectionism poses a significant risk to the economic outlook. He also emphasized that the ECB is not pre-committing to a specific rate path, noting that "disinflation is progressing, and growth prospects have weakened."

Robert Holzmann, who dissented from the ECB’s decision to cut key rates by 25 basis points following the March meeting, argued on Wednesday that further monetary easing is unnecessary.

"We had anticipated inflation would decline," Holzmann stated. "Given that we are in a neutral stance and inflation is converging toward target levels, there is no reason to adopt a more accommodative approach."

On the other side of the globe, inflation data released on Friday showed that consumer prices in Tokyo remained above the Bank of Japan’s (BoJ) 2% annual target, reinforcing the case for further rate hikes. Additionally, the BoJ’s Summary of Opinions from its March meeting revealed a broad consensus for continuing rate increases if economic conditions and price movements align with forecasts. This keeps hopes alive for additional rate hikes later this year.

At the same time, expectations of a more hawkish BoJ starkly contrast with speculation that the Federal Reserve may soon resume its rate-cutting cycle. This policy divergence strengthens the outlook for further appreciation of the lower-yielding Japanese yen.

Japanese Finance Minister Katsunobu Kato also addressed currency market movements on Monday, stating that Japan and the U.S. agree that excessive volatility in forex markets is undesirable. Bearish Momentum Could Extend from a Triple Top Formation_1

Bearish Momentum Could Extend from a Triple Top Formation_1

Technical Analysis

EUR/JPY reached a local high of 164.07 in a volatile trading session, marking the third rejection from this level. This price action suggests the formation of a triple top, a bearish pattern that could signal a shift in momentum. If sellers take control, the pair may extend its decline toward the key support level at 158.18, which has previously acted as a turning point for JPY strength.

The 100-day and 200-day moving averages, positioned at 161.80 and 159.88, respectively, have provided dynamic support during previous downward moves. If bearish pressure leads to a decisive close below the 200-day moving average, the sell-off could accelerate toward 155.61, a major support level.

As long as the price remains below the triple top resistance, the bearish outlook remains intact. However, a sustained breakout above 164.07 could invalidate the pattern, opening the door for further upside.

Trading Recommendations

Trading direction: Sell

Entry price: 161.34

Target price: 158.20

Stop loss: 163.45

Validity: Apr 11, 2025 15:00:00

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Bearish Momentum Could Extend from a Triple Top Formation

Technical Analysis

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