EUR/JPY Price Forecast: Retains bullish bias near 170.50, overbought RSI warrants caution for bulls

• EUR/JPY strengthens to around 170.45 in Monday's early Asian session, adding 0.17% on the day. 
• The positive bias of the cross prevails above the 100-day EMA, but the overbought RSI condition might cap its upside. 
• The immediate resistance level emerges in the 171.00-171.05 zone; the first downside target to watch is the 170.00 round mark. 

The EUR/JPY cross gains traction to near 170.45 during the Asian trading hours on Monday. The Japanese Yen (JPY) softens against the Euro (EUR) as data released on Monday revealed that real wages in Japan fell for five consecutive months in May, the fastest pace in nearly two years. This figure drags the JPY lower and creates a tailwind for the cross.

Technically, EUR/JPY keeps the bullish vibe on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) stands above the midline near 70.60, indicating the overbought RSI condition. This suggests that further consolidation cannot be ruled out before positioning for any near-term EUR/JPY appreciation.

The first upside target to watch for the cross is seen in the 171.00-171.05, the psychological level and the high of July 3. Extended gains could see a rally to 171.40, the upper boundary of the Bollinger Band. Further north, the next hurdle is located at 172.83, the high of July 17, 2024. 

On the other hand, the initial support level for EUR/JPY emerges at 170.00, a round figure. A breach of this level could expose 169.04, the low of July 2. The additional downside filter to watch is 168.10, the low of June 25. 

EUR/JPY Daily Chart