- EUR/JPY extends the decline to near 162.35 in Thursday’s early European session, down 0.25% on the day.
- The positive view of the pair prevails above the key 100-day EMA with the bullish RSI indicator.
- The immediate resistance level emerges at 163.31; the key support level to watch is 162.00.
The EUR/JPY cross attracts some sellers to around 162.35 during the early European session on Thursday. The Japanese Yen (JPY) weakens against the Euro (EUR) amid the growing speculation that the Bank of Japan (BoJ) will hike interest rates again this year.
Technically, the constructive outlook of EUR/JPY remains in place as the cross is well-supported above the key 100-day Exponential Moving Average (EMA) on the daily chart. However, further consolidation or temporary sell-off cannot be ruled out as the 14-day Relative Strength Index (RSI) stands below the midline near 47.25, displaying bearish momentum in the near term.
The first upside target for EUR/JPY emerges at 163.31, the high of May 21. Extended gains could see a rally to 164.46, the high of May 1. The additional upside filter to watch is 164.85, the upper boundary of the Bollinger Band.
On the flip side, the crucial support level for the cross is located at 162.00, the 100-day EMA and the psychological level. Sustained trading below the mentioned level could see a drop to 161.40, the lower limit of the Bollinger Band. The next downside target to watch is 160.00, the round figure and the low of April 8.
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.
EUR/JPY daily chart
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