EUR/JPY Price Forecast: Positive outlook remains intact, first upside barrier emerges near 186.00
|- EUR/JPY gains momentum to around 184.95 in Wednesday’s early European session.
- The cross maintains the constructive outlook above the 100-day EMA, with bullish RSI momentum.
- The first downside target to watch is 184.10; the immediate resistance level is located at 185.90.
The EUR/JPY cross attracts some buyers near 184.95 during the early European session on Wednesday. The Japanese Yen (JPY) weakens against the Euro (EUR) amid fiscal concerns on the back of Japanese Prime Minister Sanae Takaichi's reflationary policies. Markets brace for heightened volatility ahead of a snap general election on Sunday.
On the Euro front, the European Central Bank (ECB) is widely expected to hold its key interest rates steady at its February monetary policy meeting on Thursday. This would mark the fifth consecutive meeting with no change in rates.
Technical Analysis:
In the daily chart, EUR/JPY holds comfortably above the rising 100-day EMA at 180.23, preserving the broader uptrend. The average continues to ascend, underpinning pullbacks. It hovers near the upper Bollinger Band, highlighting persistent bullish pressure. RSI at 57.95 advances above its midline, signaling firm momentum without overbought conditions.
Bollinger Bands slope higher, reinforcing the bullish bias as volatility remains contained. A daily close above the upper band at 185.90 would reinforce upside extension. On the downside, support sits at the middle band of 184.10, with a deeper cushion at the lower Bollinger Band of 182.34. A break below these levels would weaken the structure and shift focus toward consolidation.
(The technical analysis of this story was written with the help of an AI tool.)
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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