The EUR/JPY pair is on fire, extending its winning streak to six consecutive days and reaching a peak of 171.29 on Monday. This upward momentum has the pair eyeing a potential retest of its year-to-date (YTD) high of 171.58, reached on April 29th.

Bullish Momentum Persists, but Intervention Risks Loom

The technical outlook for the EUR/JPY remains bullish, with the Relative Strength Index (RSI) firmly in positive territory, indicating strong buying pressure. However, the looming threat of intervention by the Bank of Japan (BoJ) or the Ministry of Finance to curb the Yen’s weakness adds a layer of caution for traders.

Key Resistance and Support Levels to Watch

• Upside Targets: The pair’s first major hurdle is the YTD high at 171.58. A break above this level could open the door for a rally towards 172.00, 172.50, and the psychological level of 173.00.
• Downside Support: In the event of a pullback, the 171.00 level will act as the first line of defense. Further support is found at the confluence of the Tenkan, Kijun-Sen, and Senkou Span A at 169.48, followed by the 50-day moving average (DMA) at 168.40.

Market Sentiment and Factors to Watch

The ongoing bullish momentum in the EUR/JPY pair is driven by a combination of factors, including Euro strength, Yen weakness, and favorable risk sentiment. However, the potential for intervention by Japanese authorities remains a significant risk factor. Traders should closely monitor any official statements or actions from the BoJ or the Ministry of Finance for clues on their tolerance for further Yen depreciation.