EURJPY Forming Rising Wedge

EURJPY is currently trading around 173.62, forming a rising wedge pattern on the 8H chart which often signals potential bearish pressure ahead. Price has tested the upper resistance trendline multiple times but failed to secure a clean breakout, indicating exhaustion from the bulls and the possibility of sellers stepping in soon. A break below 173.10 would confirm the downside momentum with potential targets near 170.40.

From a fundamental perspective, the euro remains under pressure as the European Central Bank maintains a cautious stance amid slowing growth in the eurozone. Meanwhile, the yen is attempting to stabilize with speculation that the Bank of Japan may gradually shift away from its ultra-loose monetary policy as inflation remains above target. This divergence adds weight to the short-term downside risk for EURJPY, especially if risk sentiment weakens globally.

Technical confluence supports the bearish view as momentum indicators are showing signs of divergence, with price climbing but strength not following. If sellers gain control below key support, we could see a sharp move toward 170.40, aligning with the wedge breakdown target. Traders should keep an eye on upcoming eurozone inflation data and BOJ commentary, as both will be crucial for volatility in this pair.

Risk management remains essential here as the pair is near major resistance, meaning sharp intraday spikes are possible. A well-placed stop above 174.00 ensures protection while letting the trade run toward the projected downside.