Oversold Signals and Support Retention Point Toward EURJPY Recovery

Forex Economic

Summary:

The MACD is printing a persistent bullish histogram, with signal lines rising rapidly toward the neutral threshold.

Buy EURJPY

EXP

Trading

182.838

ENTRY

183.950

TGT

181.900

182.744 +0.080 +0.04%

Point

Flat

181.900

CLOSING

182.838

ENTRY

183.950

TGT

Economic data released earlier today within the European session pointed toward a discernible improvement in regional activity. Germany's HCOB Services PMI climbed to 53.5 in February, marginally exceeding the market consensus of 53.4 and representing a significant jump from the 52.4 recorded in January. Simultaneously, the German Composite PMI edged higher to 53.2, up from the previous reading of 53.1, signaling a modest but steady expansion in the Eurozone's largest economy.

Across the broader Eurozone, the Composite PMI ascended to 51.9 in February, rising from 51.3 in January and marking a three-month high. The Services PMI followed a similar trajectory, improving to 51.9 from 51.6. These figures suggest an accelerating pace of output growth compared to the start of the year, potentially alleviating some concerns regarding a regional slowdown.

However, the disinflationary narrative encountered a series of headwinds as Eurostat’s preliminary estimates showed the Harmonized Index of Consumer Prices (HICP) increased to 1.9% year-over-year in February, up from 1.7% in January. Even more concerning for policymakers was core inflation—which excludes volatile components such as food, energy, alcohol, and tobacco—which surged to 2.4% year-over-year. This reading outpaced both market expectations and the prior reading of 2.2%, providing a complex, mixed signal for the European Central Bank's (ECB) upcoming policy deliberations.

🇯🇵 Japan: The BoJ's Normalization Path and Geopolitical Variables

Across the Pacific, the Bank of Japan (BoJ) remains resolute in its normalization trajectory. Deputy Governor Ryozo Himino maintained a hawkish-leaning outlook, suggesting that the central bank intends to continue gradually raising interest rates toward a neutral level, provided that economic and inflationary projections are realized. This stance appears to persist even if headline inflation temporarily dips beneath the 2% target.

These remarks follow a minor deceleration in Tokyo’s core inflation, which has sparked an ongoing debate regarding the exact timing of the BoJ's next strategic pivot. Governor Kazuo Ueda, speaking before the Diet this morning, reiterated the institution's standard guidance: the BoJ will increase the key policy rate if the economy evolves in line with its forecasts. However, he introduced a critical external variable, stating that the escalating conflict in the Middle East could exert a "significant impact on the global economy" and, by extension, the Japanese domestic economy.

Despite these uncertainties, expectations for a BoJ rate hike in April remain remarkably stable. A hike is currently priced at 15 basis points, a slight moderation from the 17 basis points seen last Friday, but still indicative of a market that anticipates a tightening cycle is firmly underway. Oversold Signals and Support Retention Point Toward EURJPY Recovery_1

Oversold Signals and Support Retention Point Toward EURJPY Recovery_1

Technical Analysis

From a technical perspective, EUR/JPY is currently navigating a corrective phase that recently tested an intraday low of 182.04. Price action staged a swift recovery from this level, reclaiming the critical support zone at 182.53. If buyers can successfully defend this floor, we anticipate a renewed bullish impulse targeting the primary resistance handle at 183.96.

The structural landscape is further defined by the 100 and 200-period Moving Averages (MAs), which are situated at 183.85 and 183.09, respectively. These averages are converging just beneath the aforementioned resistance, creating a high-confluence zone that the price must breach to confirm a trend reversal.

Our analysis of momentum oscillators provides a compelling case for a bullish pivot. The Relative Strength Index (RSI) plummeted to the 21 level, moving deep into oversold territory. Such extreme readings historically serve as an invitation for buyers to re-enter the market. Simultaneously, the MACD is printing a persistent bullish histogram, with signal lines rising rapidly toward the neutral threshold. A decisive crossover into positive territory would likely catalyze an acceleration of the bullish momentum, validating the thesis of an upside correction from current levels.

Trading Recommendations

Trading direction: Buy

Entry price: 182.84

Target price: 183.95

Stop loss: 181.90

Validity: Mar 13, 2026 15:00:00

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