EUR/JPY Price Forecast: Gains ground below 177.50, but stays bearish below 100-day SMA
- EUR/JPY gathers strength to near 177.30 in Wednesday’s early European session.
- The negative outlook of the cross prevails below the 100-day SMA, with bearish RSI momentum.
- The first upside barrier emerges at 178.45; the initial support level to watch is 175.90.
The EUR/JPY cross trades in positive territory around 177.30 during the early European trading hours on Wednesday. The Japanese Yen (JPY) edges lower against the Euro (EUR) on a cautious Bank of Japan (BoJ) rate outlook. Traders will closely monitor the speech by European Central Bank (ECB) President Christine Lagarde later in the day.
Bloomberg reported that BoJ policymakers are leaning against a rare back-to-back interest rate increase this month while still eyeing the possibility of another move as soon as December. The source said the Japanese central bank will instead carefully examine economic data to see if another hike is warranted as early as the December gathering.
Pricing in the overnight swaps market showed that traders are pricing in nearly a 10% chance of a rate hike this month, with the probability rising to 88% for a move by December, according to Bloomberg.
Technical Analysis: EUR/JPY keeps a bearish vibe under the 100-day SMA
In the daily chart, EUR/JPY maintains a bearish near-term bias as spot holds decisively under the Bollinger middle band and the 100-day simple moving average (SMA). Price also stays below the Bollinger upper band, underscoring a capped tone, while the Relative Strength Index (14) at 36.41 remains subdued but above oversold territory, hinting at weak selling pressure rather than an exhausted downtrend.
On the topside, immediate resistance emerges at the Bollinger middle band / 20-period SMA near 178.45, en route to the 180.00 psychological level. A desicive break above this level could pave the way to the upper boundary of Bollinger band at 181.05 and the 100-day SMA at 183.05 as a stronger structural barrier.
On the downside, initial support level is located at the lower limit of Bollinger band around 175.90. The next contention level is located at the October 20 low, 2025 of 175.34, followed by the October 2, 2025 low of 172.27.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.