EUR/JPY Price Analysis: Rally stalls around 131.00 after Fed’s decision amid a risk-on mood

• The EUR/JPY continues gaining in the week, up some 2.42%.
• Risk-sensitive peers appreciate while safe-haven weakened.
• EUR/JPY Price Forecast: Neutral upward, above 131.00, but downside risks remain.

The EUR/JPY extends its weekly gains on the back of the improved market sentiment, courtesy of progress in talks between Russia-Ukraine, despite the US central bank hiking rates for the first time since 2018. At the time of writing, the EUR/JPY is trading at 131.06.

US equity indices reflected the market mood, finishing Wednesday’s trading session with gains. In the FX space, safe-haven peers depreciated, led by the Japanese yen, while the greenback ended on the backfoot, as measured by the US Dollar Index (DXY), losing 0.70%, sitting at 98.40,

In the bond market, global bond yields were mixed, while US Treasury yields ended mixed, led by the short-term of the curve. The 10-year T-note rose three basis points and sat at 2.192%.

Aside from that, the EUR/JPY overnight traded within a 150-pip range, opening around 129.52, but reaching the daily high above 131.00, after the Fed’s monetary policy decision.

EUR/JPY Price Forecast: Technical outlook

The EUR/JPY is neutral upward biased, though short of the 78.6% Fibonacci retracement, which sits around 131.27, a level that could witness some selling pressure, based on the steeper move in the week, so far up 2.42%. Oscillator-based, the Relative Strenght Index (RSI) sits at 59, slightly aiming horizontal, meaning that the pair might consolidate before resuming to the upside.

That said, the EUR/JPY first resistance level would be 131.27. Breach of the latter, the following resistance would be 132.00, followed by 133.00. On the flip side, the first support would be the confluence of the 200-day moving average (DMA) at 129.98 and the 130.00 mark. A decisive break would expose the 50-DMA at 129.68, followed by the 129.00 mark.