EUR/JPY Price Analysis: Three-day winning streak continues ahead of ECB policy

• EUR/JPY has printed a fresh 14-month high of 153.11 ahead of ECB policy.
• The ECB is expected to raise interest rates further as Eurozone’s growth could not be threatened by current financial conditions.
• A continuation of the ultra-dovish interest rate stance is expected from BoJ Ueda.

The EUR/JPY pair has continued its three-day winning streak after overstepping June 14 high at 151.78 in the European session. The cross has printed a fresh 14-month high of 153.11 as investors are hoping that the European Central Bank (ECB) will hike interest rates further to tighten its grip over stubborn Eurozone inflation.

In May’s monetary policy meeting, ECB President Christine Lagarde confirmed that more than one interest rate hikes are appropriate in the battle against sticky inflation. Economists at Credit Agricole expect a 25 bps rate hike along with indications from the ECB that it expects persisting inflation in the Eurozone and does not believe to financial conditions have tightened enough to threaten growth, which could spur further front-loading of rate hikes and support the Euro.

This week, the interest rate decision by the Bank of Japan (BoJ) will also be in focus. A continuation of the ultra-dovish interest rate stance is expected from BoJ Governor Kazuo Ueda.

EUR/JPY has fit above the 14-year high resistance of 149.68 plotted on a monthly scale, which has turned into support. Upward-sloping 10-period Exponential Moving Average (EMA) at 145.70 is consistently providing support to the Euro bulls.

The Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which conveys that the upside momentum is active.

A mild correction to near the psychological support of 150.00 will emerge as a buying opportunity, which will drive the asset toward a fresh 14-month high at 153.11 followed by the ultimate resistance at 155.00.

Alternatively, a breakdown below May 31 low at 148.59 will drag the asset toward April 27 high around 148.00. Slippage below the latter would drag the asset toward May 04 low at 147.13.

EUR/JPY monthly chart