EUR/JPY: Dip-buyers defend uptrend – 179.70-180.75 is the next pivot zone

• EUR/JPY remains in a durable daily uptrend; as long as price holds above 177.60–178.00, the path of least resistance is higher toward 179.70, 180.10 and potentially 180.75 where Fibonacci extensions cluster.
• Momentum is constructive but not overstretched: PPO has turned positive, MFI sits mid-range, and Bollinger Bands are re-opening—supporting a buy-the-dip bias on pullbacks to 178.20–178.50.
• Macro skew is mildly euro-positive versus yen: Eurozone sentiment and industrial output are stabilizing while BoJ normalization remains gradual; the main downside risk is a risk-off shock or a hawkish surprise from Japan that forces a daily close below 177.60.

Market overview

Euro–yen is trading firmer into mid-week as risk appetite stabilized and the yen’s latest data pulse failed to unsettle the broader pro-risk tone. On the Japanese side, the current account printed a much larger surplus and high-frequency activity gauges turned higher: Economy Watchers rose, and bank lending picked up, consistent with a gradually improving domestic demand picture. The Bank of Japan’s recent communications continue to allow for a further, data-dependent normalization path, but officials have been cautious not to shock financial conditions. That combination—incremental BoJ hawkish drift without an imminent policy jolt—has kept the yen from regaining meaningful safe-haven traction when global equities are steady to higher.

Across the Channel, the euro’s macro impulse was mixed. Sentix investor confidence slipped deeper into negative territory at the start of the week, yet the ZEW survey for the euro area improved, suggesting expectations are healing even as current conditions remain soft. The ECB speaking calendar is crowded this week (Lagarde, Schnabel, de Guindos and others), and the messaging continues to emphasize patience: core inflation is normalizing, but services stickiness requires a restrictive stance a little longer, with the pace of any future easing highly conditional on the data path. Eurozone industrial production is due Thursday; consensus looks for a rebound after August’s weakness. If realized, it would support the euro on the margin—particularly against low-yielders like the yen—by firming the “soft landing” narrative for the bloc.

Big picture, EUR/JPY remains primarily a risk-sentiment and rate-differential trade. U.S. political headlines around the government shutdown have oscillated, but the latest steps toward a resolution have supported global equities and commodity currencies, compressing demand for the yen. Meanwhile, the euro benefits whenever European hard data avoid downside surprises and when ECB officials resist being seen as racing into cuts. With Japanese PPI due and additional ECB commentary ahead, the cross is set up for event-driven extensions, but the dominant driver remains the multi-month trend channel evident on the daily chart.

Technical analysis

Current technical conditions and main scenario

The daily chart shows EUR/JPY pressing the upper quadrant of a well-defined rising structure that has guided price since April. Price is trading around 179.10 after defending the mid-Bollinger band earlier this month and pushing to retest the prior swing highs near 178.80–179.20 (drawn by the 100% Fibonacci projection anchored on the most recent pullback leg). The bullish structure remains intact: rising 20-day and 100-day moving averages, higher highs/lows since the October base, and bands that have re-opened to the topside after a brief squeeze.

From here, the base case favors an extension toward the Fibonacci extension cluster above 179.70. Specifically:

• 127.2% projection of the last correction sits near 179.67.
• 141.4% comes in around 180.11.
• 161.8% is located near 180.75.
• A full measured move toward 200% sits up at 181.94.

The price reaction into 179.67–180.11 is likely to determine whether the move evolves into a trend continuation leg or stalls into a range. Given the supportive macro backdrop (risk-on bias and steady ECB tone) and the still-positive daily momentum, the higher-probability path is a grind higher into 180.11 first, with scope to 180.75 if intraday dips hold above the reclaimed breakout shelf at 177.60–177.80.

Why that zone matters: 177.60 aligns with the 61.8% retracement of the last up-swing (from 175.70 to 178.80) and now tracks just above the rising 50-day average and the lower envelope of the rising short-term channel drawn off the September and October swing lows. As long as daily closes remain above 177.60, buyers retain control and the market treats pullbacks as opportunities to add to longs.

Oscillators and market internals

• Price Percentage Oscillator (daily PPO) has curled back above its signal line and sits modestly positive. That indicates bullish momentum has resumed after the brief consolidation under the late-October highs. The histogram is shallow but expanding, consistent with an early-stage push rather than a blow-off move.
• Rate of Change (daily ROC) recovered from negative territory and hovers just above the zero-line, signaling a re-acceleration but not yet an overextended thrust. That leaves room for a measured trend continuation before momentum triggers overbought conditions.
• Money Flow Index (MFI) around the low-to-mid-50s suggests buying pressure has improved without signaling a crowded long. This is typically constructive in uptrends because it indicates participation is broadening, not peaking.
• Volatility: the Bollinger Bands widened again following last week’s brief squeeze. Upper band resistance is migrating upward through 180, which often acts like a moving target in trends; sustained closes above the upper band tend to precede short bursts of trend acceleration, especially when supported by positive PPO and neutral MFI.
• Breadth across lower time frames (4-hour and 1-hour) shows minor negative divergences at 179–179.20 that have so far been resolved by shallow dips rather than full reversals. The most recent dip into the mid-band was bought quickly, reinforcing the buy-the-dip behavior.

Collectively, the oscillators confirm, rather than lead, the price action: momentum is constructive but not exhausted; participation is adequate; and volatility is normalizing in favor of the prevailing trend. That supports the main scenario of incremental topside probing toward 180.10/180.75 provided pullbacks respect 177.60–178.00.

Key levels

Upside

• 179.20/179.30: recent spike-high zone aligned with the 100% projection of the last leg. Intra-day supply has been fading here; a sustained hourly close above would open a new impulse.
• 179.67: 127.2% Fibonacci extension of the last corrective downswing. First resistance in the current push.
• 180.11: 141.4% extension and the top of a minor measured-move box; the first higher-time-frame inflection.
• 180.75: 161.8% extension; an area where momentum could temporarily stall unless macro catalysts turn decisively euro-positive.
• 181.94: 200% extension, also in the vicinity of trend channel resistance from the April base—an upside tail-risk if risk-on accelerates and BoJ rhetoric stays patient.

Downside

• 178.20/178.30: intraday support created by the base above the mid-band and prior breakout retest.
• 177.62–177.80: 61.8% retracement of the latest leg up; now key pivot confluence with the 20-day average. Loss of this zone would mark a meaningful momentum fade.
• 176.50/176.70: daily mid-channel and rising trendline support from the summer base; a must-hold for the medium-term uptrend.
• 175.70/175.95: last corrective swing low and 0% retrace of the current Fibonacci grid; a break would confirm a trend phase change toward range consolidation.

Alternative scenario

A bearish rejection from the 179.67–180.11 resistance pocket that pushes back below 178.20 on a daily close would warn that the rally is stalling beneath extension resistance. In that case, EUR/JPY likely rotates into a deeper mean-reversion toward 177.60 first and 176.50 thereafter, using 180.11 as a near-term cap. A decisive daily close beneath 176.50 would neutralize the trend and put 175.70 back in play. This path requires either a notable risk-off impulse (equity wobble, geopolitical flare-up) or a hawkish surprise from BoJ commentary that tightens front-end Japanese rates faster than the ECB narrative evolves.

Fundamental outlook and event map

The coming sessions are dense with policy communication and mid-tier data that matter for EUR/JPY via three channels: relative rate expectations, risk appetite, and trade/inflation dynamics.

Japan: Macro momentum and BoJ signaling

The latest Japanese releases skew yen-supportive at the margin. Current account surplus remains substantial; the Economy Watchers survey and bank lending suggest domestic activity is stabilizing rather than stalling. The pipeline inflation gauge (PPI) lands Thursday: consensus looks for 2.5% y/y, a modest deceleration. A firm PPI print would reinforce the BoJ’s message that cost-push disinflation is fading slowly, keeping alive the option for another rate hike later this year. However, BoJ officials have signaled they are sensitive to financial stability and wage-price dynamics, not eager to rekindle abrupt yen volatility. For the cross, the bar for a near-term BoJ-driven yen rally remains high; modestly firmer PPI would likely support the yen only if it coincides with global risk aversion.

Euro area: Activity pulse and ECB tone

ZEW sentiment improved; investors expect recovery to grind on. The hard test is Thursday’s industrial production. A positive surprise after months of choppy factory output would validate the idea that the trough is behind us, nudging rate-cut timelines marginally later and lending the euro additional support. ECB speakers (Lagarde, Schnabel, Elderson, Lane) will likely stick to the script: restrictive stance is doing its job; easing is conditional, data-dependent, and not on a preset course. Markets already price a gentle 2026 terminal rate around the RBA and BoE spectrums, but in Europe the rate-cut path is somewhat flatter than in the U.S., which can keep EUR/JPY underpinned so long as Japanese front-end yields remain anchored.

Global risk and US spillovers

Though EUR/JPY is less dollar-centric, the cross reacts to the global risk climate. Progress toward ending the U.S. shutdown improves risk appetite, softening the yen. U.S. inflation and employment expectations later this week, plus Treasury supply (10- and 30-year auctions), will shape yields and equities. A calm, slightly risk-positive tape helps EUR/JPY stretch higher; an adverse shock (weak auction demand, hawkish Fed rhetoric, renewed equity drawdowns) would feed yen strength and cap the cross near 180.

What would validate the bullish case?

• Eurozone industrial production beats expectations and ECB speakers sound patient but not dovish; equities hold bid and credit spreads stay contained.
• Japan PPI is benign, and BoJ commentary reiterates gradualism over urgency.
• Price action holds above 177.60 on dips and prints a daily close through 179.70, converting that level into support.

What would challenge it?

• A hot Japan PPI alongside firmer wage anecdotes that push JGB yields higher and revive near-term BoJ hike bets.
• A downside surprise in Eurozone production coupled with a cautious ECB tone that reawakens growth concerns.
• A shift to global risk-off—e.g., wobble in U.S. tech, poor Treasury auction tails, or negative geopolitical surprises—reviving safe-haven demand for the yen.

Trading takeaways

• Strategic bias: buy-the-dip while the daily trend structure remains intact. The risk-adjusted entry zone sits at 178.20–178.50 on a pullback, with invalidation under 177.60 on a daily close. First topside objectives are 179.70 and 180.10, then a partial-take-profit window into 180.70–180.80 where 161.8% extension meets rising band resistance.
• Tactical tell: watch intraday acceptance above 179.20/30. If the market builds value above that shelf with rising participation, the path of least resistance opens toward 180+ within the current news cycle.
• Risk management: given event risk from ECB commentary and Japan PPI, keep position sizes modest and trail stops below 178.20 once 179.70 trades. A daily close below 176.50 would neutralize the trend and argue for stepping aside.

Conclusion

EUR/JPY’s macro and technical backdrops remain aligned for a measured continuation of the uptrend. The cross has cleared back into the upper third of its rising daily channel, momentum has re-engaged without overextension, and the next resistance cluster sits tightly stacked between 179.70 and 180.75. As long as the market defends 177.60 on daily closes, dips remain constructive. The alternative—an abrupt reversal—requires either a sharp risk-off shock or a hawkish BoJ surprise. Barring that, the path of least resistance favors incremental higher highs toward 180-181 as this week’s European data and ECB rhetoric confirm stabilization rather than slippage.