EUR/JPY Price Forecast: Declines below 184.00, but uptrend intact above EMA

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EUR/JPY trades with mild losses near 183.90 in Tuesday’s early European session.
Broader uptrend remains intact above the 100-day EMA, but further consolidation cannot be ruled out in the near term.
The initial support level is seen at 183.40; the first upside barrier to watch is 185.00.

The EUR/JPY cross posts modest losses around 183.90 during the early European session on Tuesday. The Japanese Yen (JPY) strengthens against the Euro (EUR) as rising geopolitical tensions in the Middle East boost the safe-haven demand. Additionally, hawkish remarks from the Bank of Japan (BoJ) policymakers contribute to the JPY’s upside.

Traders await the preliminary reading of the Harmonized Index of Consumer Prices (HICP) from the Eurozone, which is due later on Tuesday. Any signs of hotter inflation in the bloc could lift the EUR against the JPY in the near term.

Technical Analysis:

In the daily chart, EUR/JPY turns mildly bearish in the near-term as price slips back toward the 183.25–183.50 area after failing to extend gains above the recent highs near 186.00. Daily closes remain above the 100-day exponential moving average around 181.20, keeping the broader uptrend intact, but the flattening of the Bollinger midline near 183.40 and price oscillation around it signal fading upside momentum. The RSI hovers in the low-50s after backing off from stronger readings, indicating waning bullish pressure rather than outright selling strength.

Initial support emerges around the Bollinger midline and recent reaction lows at 183.40, followed by stronger support at 182.50 and then the 100-day EMA near 181.20, where the broader bullish structure would be tested. On the upside, immediate resistance stands at 185.00, with a break exposing 186.00 and then the upper Bollinger Band near 186.25. As long as EUR/JPY holds below 185.00, the risk favors further consolidation or a drift toward 182.50, while a daily close back above 186.00 would revive the broader bullish trend.

(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.