EUR/JPY Price Forecast: First upside barrier emerges near 185.00

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The EUR/JPY cross loses traction to near 184.35 during the early European session on Monday.

EUR/JPY weakens to around 184.35 in Monday’s early European session.
The cross keeps the bullish bias, with bullish RSI indicator
The first upside barrier emerges at 185.00; the initial support level to watch is 183.13.

The EUR/JPY cross loses traction to near 184.35 during the early European session on Monday. The Japanese Yen (JPY) strengthens against the Euro (EUR) amid concerns about rising tensions between the US and Venezuela and persistent geopolitical uncertainties stemming from Israel–Iran tensions, which boost the safe-haven flows.

Additionally, verbal intervention from Japanese officials might provide some support to the JPY and act as a headwind for the cross. Japan’s top foreign exchange official, Atsushi Mimura, said on Monday that he is concerned about foreign exchange moves and will take appropriate action against excessive actions.

Technical Analysis:

In the 4-hour chart, EUR/JPY holds well above a rising 100-EMA at 182.02, reinforcing a bullish short-term bias. The average continues to ascend, aligning with higher lows. Bollinger Bands have widened and price hovers just below the upper band at 185.00, pointing to robust upward momentum and stretched conditions. RSI at 69.51 sits near overbought, confirming strong buying pressure.

Volatility expansion within the Bollinger envelope favors trend continuation, but a failure to clear the upper band would encourage consolidation. Pullbacks could test the middle band at 183.13, while the 100-EMA at 182.02 and the lower band at 181.27 would underpin deeper retracements. A decisive break above the upper band would extend the rally, whereas a close back below the midline could shift momentum toward range normalization.

(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.