EURJPY has formed higher lows and lower highs, creating a symmetrical triangle pattern on its 4-hour time frame. Price is now testing the triangle resistance and might be considering a breakout.
The 100 SMA is above the longer-term 200 SMA on this time frame so the path of least resistance is to the upside. Also, the 100 SMA lines up with the bottom of the triangle, adding to its strength as support.
RSI is on the move up to show that buyers are taking control of price action. Stochastic is also heading up so EURJPY could follow suit. A bit of bullish divergence can be seen as well, as price made level lows while oscillators had higher lows. An upside breakout from the triangle pattern could last by a thousand pips, which is roughly the same height as the chart formation.
If the triangle resistance keeps gains in check, EURJPY could head back to the triangle support around 114.50 for another potential bounce. Price is already approaching the peak of the pattern so a breakout could take place soon. If it moves lower, price could drop by a thousand pips as well.
A report from the Nikkei revealed that BOJ policymakers could be discussing lowering interest rates further in the upcoming rate statement. An official shared that they are weighing the advantages and disadvantages of doing so, although it could be possible that they might reduce JGB purchases to counteract this. BOJ officials are also rumored to remove the timeline of achieving their 2% inflation target in two years.
The actual policy decision will take place next week so speculations about the event could continue to drive yen price action. Any indication that the BOJ policymakers could sit on their hands could revive yen gains while more reports suggesting that they could ramp up their stimulus could spur more losses.