Euro outlook: EUR/JPY, EUR/CHF test upper bounds

• EUR/JPY uptrend intact despite evening star reversal warning
• Oscillators tilt bullish with RSI trending higher and MACD positive
• 180.00 support key for longs targeting 182.00
• EUR/CHF breakout attempt hinges on .9325 and 50DMA

Summary

EUR/JPY and EUR/CHF are both sitting at important technical junctures. For EUR/JPY, the uptrend remains dominant, with oscillators backing a bullish bias as long as 180.00 support holds. EUR/CHF, meanwhile, is flirting with a breakout above .9325 after consecutive closes above the 50DMA—a move that could open the door to higher targets if resistance finally cracks.

EUR/JPY Uptrend Remains Intact

Source: TradingView

EUR/JPY remains in a strong uptrend on the daily timeframe, hitting fresh record peaks late last week before pulling back on Friday. While the three-candle evening star reversal pattern warns of potential downside risk, unless accompanied by a break beneath minor support at 180.00, the move appears more corrective than a definitive signal, arriving from overbought territory.

For now, the message from the oscillators favours upside over downside. RSI (14) continues to trend higher but is no longer sitting in overbought territory, setting a string of higher lows since early October. The bullish message is confirmed by MACD, which staged a bullish crossover earlier this month before pushing higher. When it comes to assessing setups, a bullish bias is warranted.

Should 180.00 support continue to hold, it may encourage bulls to establish longs looking for a return to Thursday’s high of 182.00. If that level is surpassed, the preference would be to wait for an obvious topping pattern before considering whether to cut, hold, or reverse, rather than nominating a specific extension target.

Beneath 180.00 support, there are a string of minor levels to watch, including the October 30 high of 178.83, the October uptrend and 177.25, before more important levels such as the 50-day simple moving average and July 2024 swing high of 175.42 arrive.

EUR/CHF Testing Range Highs

Source: TradingView

EUR/CHF is another pair that tends to respect known levels, allowing for setups to be assessed depending on signals and location on the charts. Right now, it sits just beneath .9325, the top of the range it has traded in since early October. That level should be the focal point for anyone considering setups near-term, along with the 50-day simple moving average found today at .9296.

Given recent price and momentum signals, bullish setups are favoured over shorts, although it’s not a definitive message. While the bullish pin candle printed on November 14 delivered a strong signal on what was to come, the move from what’s becoming a reliable reversal zone is now at risk of stalling, unable to break above .9325 resistance on Monday. However, the key difference this time is the pair has managed to close above the 50DMA on consecutive days, differentiating this bullish breakout attempt from those in the recent past that stalled above the level.

Should we see a pullback towards the 50DMA, longs could be set above it with a stop beneath for protection, targeting .9325 initially. If that level were to give way, it may see more bulls join in the move, allowing for fresh longs to be established on the break with a stop below, targeting either the 200-day simple moving average or .9370 resistance.

Should the price remain capped beneath .9325, it would provide the option for shorts to be established with a stop above for protection, targeting either the 50DMA, .9289, or .9268.

With RSI (14) above 50 and MACD creeping into positive territory having already crossed the signal line from below, the message from the oscillators is tilting bullish, but not definitively so. While long setups remain favoured, don’t dismiss bearish price action or signals if and when they arrive.