EUR/JPY Price Forecast: Constructive outlook prevails above 174.50

• EUR/JPY softens near 174.75 in Monday's early European session.
• A positive view of the cross prevails above the 100-day EMA, with the bullish RSI indicator.
• The immediate resistance level is seen in the 175.30; the first support level to watch is 174.05.

The EUR/JPY cross loses ground around 174.75 during the early European session on Monday. The Japanese Yen (JPY) strengthens against the Euro (EUR) amid the safe-haven flows as the US government risks a shutdown. However, political uncertainty in Japan might cap the upside for the JPY. Japan's Liberal Democratic Party (LDP) leadership election will take place on 4 October and the outcome could delay the next interest rate hike by the Bank of Japan (BoJ) if a candidate with dovish views is selected. 

Technically, the constructive outlook of EUR/JPY remains in place, with the price being well-supported above the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is supported by the 14-day Relative Strength Index, which stands above the midline near 63.45. This suggests that further upside looks favorable in the near term. 

On the bright side, the crucial upside barrier emerges at the upper boundary of the Bollinger Band of 175.30. Sustained trading above this level could pick up more momentum and aim for 175.43, the high of July 17, 2024. Further north, the next resistance level is seen at the 176.00 psychological level. 

On the downside, the initial support level for EUR/JPY is located at 174.05, the low of September 23. Any follow-through selling below this level could see a drop to 173.48, the low of September 19. The additional downside filter to watch is 172.00, the lower limit of the Bollinger Band.

EUR/JPY daily chart