EUR/JPY Price Forecast: Retains bullish bias above 171.50, overbought RSI warrants caution for bulls

• EUR/JPY gathers strength to around 171.65 in Friday's early European session. 
• The cross maintains a constructive view above the 100-day EMA,  but the overbought RSI condition might cap its upside. 
• The immediate resistance level is seen at 172.00; the initial support level is located at 170.00.

The EUR/JPY cross gains ground to near 171.65 during the early European session on Friday. The Japanese Yen (JPY) strengthens against the Euro (EUR) as traders reduce bets that the Bank of Japan (BoJ) will raise interest rates this year amid concerns about the potential economic fallout from higher US tariffs. 

Technically, EUR/JPY keeps the bullish vibe on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). Nonetheless, the 14-day Relative Strength Index (RSI) stands above the midline near 70.50, indicating the overbought RSI condition. This suggests neutral momentum, indicating that further consolidation or a temporary sell-off cannot be ruled out before positioning for any near-term EUR/JPY appreciation.

The first upside target to watch for the cross is seen at 172.00, representing the psychological level and the high of July 8. Extended gains could see a rally to 172.53, the upper boundary of the Bollinger Band. Further north, the next hurdle is located at 174.52, the high of July 3, 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.  Further south, the next downside target to watch is 168.10, the low of June 25.

EUR/JPY daily chart