EUR/JPY Price Forecast: Softens below 180.00, bearish bias persists below 100-day SMA
- EUR/JPY weakens to near 179.85 in Thursday’s early European session.
- The negative outlook for the cross remains intact below the 100-day SMA, with bearish RSI momentum.
- The first upside barrier emerges at 180.00; the initial support level is seen at 178.48.
The EUR/JPY cross trades in negative territory around 179.85 during the early European trading hours on Thursday. Intervention risks from Japanese authorities provide some support to the Japanese Yen (JPY) against the Euro (EUR). Germany’s IFO survey is due later on Thursday.
Traders remain on high alert for currency intervention from Japanese officials, particularly given the recent reported rate check. “FX intervention remains a blunt tool to prop up currencies, and without a forceful monetary policy response it will be difficult for Japanese authorities to rein in the selloff in the yen,” said Matthew Ryan, head of market strategy at Ebury Partners Ltd.
The Bank of Japan (BoJ) decided to raise its policy rates by 25 basis points (bps) last week, as widely expected. Governor Kazuo Ueda’s remarks fell short of increasingly hawkish market expectations. Analysts believe that the JPY could face some selling pressure in the near term if markets are unconvinced that more BoJ tightening is coming.
US-Japan alignment extends into BoJ policy and yen carry dynamics
Analysts at Rabobank highlight that the deepening strategic ties between the US and Japan are now being reflected in financial markets. They note that “Trump and Japan’s PM Takaichi met to reaffirm their close geopolitical and geoeconomic alliance,” and stress that “that now encompasses the BoJ and the Yen carry trade too.” In this context, Rabobank points out that “Japan’s big banks' domestic loan share is seeing its first sustained post-1991 bubble burst rise,” describing this as “exactly what the White House and Takaichi want as (defence) industry investment rises.”
Technical Analysis: EUR/JPY remains capped under the 100-day SMA
In the daily chart, EUR/JPY keeps a bearish near-term bias as spot remains below the 20-period Bollinger middle band and the 100-day simple moving average (SMA). The pair is also capped by the upper Bollinger band, while the Relative Strength Index (14) around 40 suggests lingering downside pressure rather than outright oversold conditions.
On the topside, the initial resistance level emerges at the 180.00 psychological mark, en route to the Bollinger middle band at 180.70 and the 100-day SMA at 184.05. A decisive break above this level could pave the way to the upper Bollinger band near 185.50.
On the downside, the first support level is located at the September 17 low of 178.48, followed by the September 14 low of 177.45. The lower limit of Bollinger band at 175.91 offers the next meaningful contention level, with a sustained break beneath that zone likely to open the way to a deeper corrective phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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