EUR/JPY Price Forecast: Softens below 182.50, retains bullish bias above 100-day EMA

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The EUR/JPY cross loses traction to near 182.35 during the early European session on Thursday. The Japanese Yen (JPY) edges higher against the Euro (EUR) as rising geopolitical tensions in the Middle East drive investors toward safe-haven assets.

EUR/JPY weakens to around 182.35 in Thursday’s early European session.
The cross retains a mildly bullish bias above the key 100-day EMA.
The first upside barrier emerges at 183.15 and the initial support level is seen at 181.20.

Furthermore, BoJ Governor Kazuo Ueda reaffirmed a commitment to a potential interest rate hike despite Middle East instability, though markets widely anticipate the Japanese central bank to stand pat at its March meeting.

The Eurozone Retail Sales will be the highlight later on Thursday. Economists expect a rise of 1.7% for the month of January. If the reports come in stronger than expected, this could lift the Euro against the JPY in the near term.

Technical Analysis:

In the daily chart, the broader setup of EUR/JPY retains a mildly bullish bias as price holds well above the rising 100-day exponential moving average, keeping the medium-term uptrend intact despite the pullback from recent highs around 185. The pair has slipped back into the upper half of its Bollinger structure after failing to extend above the upper band near 185.75, signalling easing upside momentum rather than a trend break. RSI around 44 shows momentum has cooled into neutral territory, consistent with a corrective phase within a still-positive underlying structure rather than outright bearish control.

Initial resistance emerges at the Bollinger middle band near 183.15, where the latest consolidation has stalled, followed by the recent swing high at 184.70 and then 185.70. A daily close back above 183.15 would ease immediate downside pressure and open a retest of 184.70. On the downside, immediate support stands at the 100-day EMA near 181.20. A break below this level would weaken the prevailing bullish bias and expose deeper support toward 179.80, where prior Bollinger lower-band interaction suggests stronger dip-buying interest.

(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.