EUR/JPY Price Forecast: Gains persist above 176.50, though bias remains bearish below 100-day SMA

• At around 176.65, EUR/JPY posts modest gains in early Asian trading on Monday.
• Minutes from the BoJ meeting signalled policymakers’ readiness to step up monetary tightening.
• Below the 100-day SMA, the cross retains a negative outlook as the RSI signals bearish momentum.
• Resistance lies immediately ahead at 176.80, while 175.70 marks the first support level to monitor.

Around 176.65 in early European trading on Monday, EUR/JPY holds modest gains. Hawkish signals from the Bank of Japan (BoJ), however, could constrain further advances in the cross.

Last month’s decision to hold rates steady came alongside an emphasis on the BoJ’s determination to address inflation risks, bolstering market expectations for a December rate rise. Minutes of its September meeting, published on Thursday, showed that most policymakers considered further interest rate increases appropriate as underlying inflation neared the central bank’s 2% target.

A December interest rate rise is expected to be followed by further increases in borrowing costs next year until they reach 2%, former top BoJ economist Seisaku Kameda said on Friday. He attributed the expected tightening to the need to tackle growing inflationary pressure.

Yen outperforms as AI volatility weakens the Dollar’s safe-haven appeal

Recent trading has seen the Japanese Yen clearly outperform, according to OCBC analysts, who observe that “the standout has been the JPY.” In their assessment, the currency’s strength “reinforces its value as a hedge against a reversal in the US-centric AI trade,” although “it is probably too early to expect sustained JPY gains purely on AI concerns.” OCBC also argues that “more frequent US-centric AI volatility in 2027 could strengthen its hedge appeal,” with the “AI sell-off is creating competing forces for the USD.” The analysts conclude that “falling US yields are blunting the USD’s safe-haven appeal, leaving the JPY as the standout hedge against more US-centric volatility.”

Domestic investment flows in Japan could offer a further source of support beyond the AI theme, OCBC adds. The analysts identify “Japanese portfolio rebalancing” as “the other potential JPY catalyst,” as markets prepare to examine “GPIF’s July-September results for signs of a shift towards domestic assets.” Their assessment is that “if GPIF and other Japanese investors bring more money home or increase FX hedging on overseas assets, an important source of structural JPY selling could fade,” so “GPIF flows could provide another tailwind for the JPY.”

Technical Analysis: EUR/JPY stays below the 100-day SMA

With spot trading below both the 100-day Simple Moving Average (SMA) and the middle Bollinger Band, the daily chart points to a bearish near-term bias for EUR/JPY. Trading remains confined to the lower half of the Bollinger envelope, making the lower band the immediate downside reference. Meanwhile, the Relative Strength Index (RSI) stands at 44.39, indicating weak momentum rather than outright oversold conditions.

The middle Bollinger Band, near 176.80, provides the first resistance on any advance, ahead of the upper band around 178.30. Sustained buying beyond that level could bring the psychological 180.00 mark into view, followed by the 100-day SMA at 181.50. 

Initial support comes from the 2 November low at 175.70, with the lower Bollinger Band at 175.30 next in line. Should the cross break decisively below that level, a move towards the 6 October 2025 low of 174.74 would become likely. 

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