EUR/JPY Price Forecast: Loses ground below 183.00 on BoJ rate hike signals, softening RSI momentum

EUR/JPY weakens to around 182.90 in Wednesday’s early European session.
Members agree the central bank will likely continue raising rates if its economic and price projections materialize, BoJ Minutes showed.
The constructive outlook of the cross prevails, but further consolidation cannot be ruled out amid softening RSI momentum.
The first upside barrier emerges at 184.00; the initial support level to watch is 182.18.

Lallalit Srijandorn FXStreet

The EUR/JPY cross loses ground to near 182.90 during the early European session on Wednesday. The Japanese Yen (JPY) edges higher against the Euro (EUR) amid hawkish Bank of Japan (BoJ) December meeting minutes, which showed that members agreed on the need to continue raising interest rates.

Nonetheless, the upside for the JPY might be limited amid concerns over Japan's fiscal health, fueled by Prime Minister Sanae Takaichi's aggressive spending and tax cut plans. Takaichi said on Monday that she hopes to achieve a two-year suspension of the 8% tax on food at the earliest date possible and submit relevant legislation in the fiscal 2026 diet.

Technical Analysis:

In the daily chart, EUR/JPY holds above the 100-day EMA, preserving the broader bullish structure. Its positive slope suggests dips remain supported. Price trades below the 20-period Bollinger midline and hovers near the lower band as the bands widen, indicating increasing volatility and a heavier tone. The RSI prints at 45, signaling weakening momentum without oversold conditions. A clearance of 184.00 would expose 185.85, whereas a break below 182.18 could target 179.75. A close back above the mid-band could stabilize the tone; failure to reclaim it would keep bears probing the lower boundary.

As long as EUR/JPY trades above the 100-day EMA, pullbacks would remain corrective. A decisive break below that average would complicate the medium-term picture. With price anchored beneath the Bollinger midline and near the lower band, the path of least resistance leans to the downside. RSI easing from recent readings confirms softening momentum.

(The technical analysis of this story was written with the help of an AI tool.)

Japanese Yen FAQs

What key factors drive the Japanese Yen?

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.

How do the decisions of the Bank of Japan impact the Japanese Yen?

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.

How does the differential between Japanese and US bond yields impact the Japanese 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.

How does broader risk sentiment impact the Japanese Yen?

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.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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