• On Wednesday, the EUR/JPY gained more than 1.70% during the day.
• EUR/JPY price action shows the pair is overextended, opening the door for a mean reversion move.

The Japanese yen continues to weaken against most G8 currencies, and the common currency is no exception, with the EUR/JPY registering huge gains of more than 240 pips, closing to the YTD high at around 144.27. The EUR/JPY retreated and is trading at 143.99, some 40 pips shy of the 2022 highs, as the Asian session begins.

EUR/JPY Price Analysis: Technical outlook

The EUR/JPY daily chart suggests the pair is overextended after rallying close to 500 pips in two days, ahead of the European Central Bank (ECB) monetary policy. Oscillators, particularly the Relative Strength Index (RSI) at overbought conditions, suggest that the pair could retreat from current exchange rates before extending its gains if that’s the case.

Shifting to the 4-hour scale, the EUR/JPY is trading below June’s 29 daily high, and the Relative Strength Index (RSI) is in overbought territory, above its last peak, meaning that a reversal looms.

Therefore, If that scenario plays out, the EUR/JPY first support would be the daily pivot point at 143.05. The break below will expose the S1 daily pivot at 142.10, followed by the 20-EMA at 141.11.

On the flip side, a break above the YTD low at 144.27, the next resistance would be the psychological 145.00 figure.

EUR/JPY Key Technical Levels