EUR/JPY Forecast: Rebounds from Ascending Channel Bottom, Eyes 186.00

EUR/JPY extended its rebound during Tuesday's Asian session, with the pair trading near 185.74 after finding support at the lower boundary of the ascending channel and closing higher for two consecutive days. The daily chart technical pattern shows the pair remains within the ascending channel, indicating the medium-term bullish bias has not been broken.

**Ascending Channel Support Holds, Short-Term Momentum Recovers**

From a chart perspective, EUR/JPY pulled back to the lower boundary of the ascending channel around 184.80 and stabilized before rebounding, with this level viewed by the market as key short-term support. After holding this support, the pair launched a sustained rebound, reflecting strong buying interest near the channel's lower edge. The price has now returned above 185.70, and if it can hold further, it may continue toward the upper boundary of the channel. However, the spot price had previously dipped slightly below the 9-day and 50-day exponential moving averages, suggesting the short-term moving average system has not fully turned bullish, and fluctuations around these averages remain a risk during the rebound.

**Upside Resistance and Downside Risks Coexist**

On the upside, market focus lies around the 186.00 psychological level, a key battleground for recent bulls and bears. A decisive break and hold above this level would further confirm the bullish structure within the ascending channel. On the downside, major support remains at the lower boundary of the channel near 184.80. According to market analysis, a sustained break below this channel would exert significant downward pressure on EUR/JPY, with the next target potentially being the 181.87 area, the four-month low set on March 16. As long as the channel is not effectively broken to the downside, the overall bullish stance remains intact.

**Focus Shifts to Risk Sentiment and EUR-JPY Yield Differentials**

Beyond technical drivers, EUR/JPY's trajectory is highly dependent on market risk appetite and the divergence in monetary policy expectations between the Eurozone and Japan. While the pair remains within the channel, whether it can extend gains to the upside will require supportive external macro factors. In the absence of new catalysts, EUR/JPY is likely to maintain a firm-but-choppy tone within the channel.