EUR/JPY Price Forecast: Edges higher above 184.50, but stays capped by clustered resistance

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The EUR/JPY cross trades in positive territory around 184.65 during the Asian trading hours on Monday. However, the potential upside for the cross might be limited as heightened geopolitical tensions in the Middle East could boost a safe-haven currency.

EUR/JPY gains momentum to near 184.65 in Monday’s Asian session.
The cross keeps a bearish vibe in the near term, with the RSI holding below the midline.
The first upside barrier emerges in the 184.80-184.85 zone; the initial support level is seen at 183.53.

Furthermore, speculation over domestic asset shifts could underpin the Japanese Yen (JPY) against the Euro (EUR). Japan’s Finance Minister Satsuki Katayama said on Friday that the government is pursuing measures that would include the Government Pension Investment Fund (GPIF) to make "substantially greater investments in Japanese financial assets. Analysts said this move could offer greater support to ‌the battered currency than intervention.

Technical Analysis:

In the daily chart, EUR/JPY keeps a mildly bearish near-term tone as spot holds beneath the 100-day Simple Moving Average (SMA) and the Bollinger Bands’ 20-day middle line. The pair is drifting in the lower half of the recent volatility envelope, with the lower Bollinger band acting as the next downside reference, while the Relative Strength Index (RSI) at 47.6 hovers just under the neutral 50 line, hinting at subdued, consolidative downside pressure rather than a strong trend.

On the topside, initial resistance emerges in the 184.80-184.85 zone, representing the Bollinger 20-day middle band and the 100-day SMA. A daily close above this clustered band would be needed to ease the current downside bias and expose the upper Bollinger band near 186.12. On the downside, the first notable support is the lower Bollinger band at 183.53, where buyers could attempt to slow the decline; a break below this level would reinforce the bearish bias and open the door to a deeper corrective slide.

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

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.