EUR/JPY Price Analysis: Risk of recovery after deep sell-off

EUR/JPY finds a floor after its steep sell-off.
The pair forms a Dragonfly Doji and recovers – a bullish close on Friday would add confidence to bulls.
Once the pull back is complete, however, the medium-term downtrend is likely to resume.

Joaquin Monfort FXStreet

EUR/JPY is at risk of recovering after the steep sell-off of the last two weeks has stalled. The EUR/JPY pair reached a low of 164.83 on Thursday – well below its July 11 peak of 175.43. Since then it has been edging higher as the pair recovers from oversold extremes.

EUR/JPY Daily Chart

The pair formed a bullish Dragonfly Doji reversal candlestick on Thursday (blue shaded rectangle on chart above) and if it is followed up by a bullish close on Friday it will suggest a correction higher is underway.

Additionally, the Relative Strength Index (RSI) entered oversold territory (below 30) on Thursday and if it manages to move back above the oversold zone on Friday it will be a signal that price will probably go higher.

If the pair does recover, however, it is likely to be corrective and eventually run out of steam. This is because both the short and medium-term trends are now probably bearish, which given the old saying “the trend is your friend” suggests the bias is to the downside.

Once the recovery runs out of energy, price will probably resume its downtrend. The next support level to look out for is the 200-day Simple Moving Average (SMA) at 163.97. A close below that might see EUR/JPY fall to major trendline support at around 157.50.

The longer-term trend remains intact, however, and there is a chance the pair could make a full recovery back up to the July 11 highs, and possibly go even higher. Whether this happens or not depends on how price action unfolds and how vigorous the recovery is.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold hits fresh three-month low below $4,000 amid surging energy prices

Gold slides to a fresh three-month low at $3,986.74 in the Asian trade on Friday. The precious metal faces intense selling pressure, following a consolidation breakdown that took place on the range between $4,227.90 and $4,066.64 in the past three weeks.

Cardano: Whale selling deepens correction

Cardano (ADA) edges higher by nearly 2% on Friday, following a roughly 6% decline the previous day. The pullback aligns with the sell-side appeal among large-wallet investors, commonly referred to as whales, and Cardano derivatives. The technical outlook for ADA is bearish, with downside momentum persisting. Whales are losing their appetite for holding ADA tokens, fueling near-term selling pressure.

The Bank of England just got its clearest reason to hike. Here's what it's really watching

UK inflation as measured by the CPI accelerated to 3.5% YoY in September, up from 3.1% in August, according to the Office for National Statistics. This is the highest level since October 2025, exceeding economists' expectations of 3.4% and pushing inflation further from the BoE's 2% target.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.