EUR/JPY Price Forecast: Softens below 184.00 on Middle East tensions but holds above key 100-day EMA

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EUR/JPY weakens to around 183.85 in Tuesday’s early European session.
The cross keeps a bullish vibe above the key 100-day EMA, with modest positive RSI momentum.
The initial support level is seen at 183.50; the first upside barrier emerges at 184.70.

The EUR/JPY cross loses ground to near 183.85 during the early European session on Tuesday. The Japanese Yen (JPY) strengthens against the Euro (EUR) amid the ongoing conflict in the Middle East, which boosts safe-haven flows. The Israeli military said it had launched a fresh wave of strikes on Tehran, the Guardian reported on Tuesday. This action came after US President Donald Trump signaled a pause in US attacks against energy infrastructure after what he said were productive talks with Iran.

On the other hand, cooler-than-expected Japanese inflation data reduces the immediate pressure on the Bank of Japan (BoJ) to raise interest rates. This, in turn, might cap the upside for the JPY and act as a tailwind for the cross.

Technical Analysis:

In the daily-chart, EUR/JPY continues to hold above the 100-day exponential moving average near 181.70, keeping the broader bias mildly bullish despite the recent pullback from the upper Bollinger Band area. The pair is now oscillating around the Bollinger middle band at 183.53, suggesting consolidation after the prior advance, while the still-rising band structure indicates that the underlying uptrend remains intact. The RSI at 52.71 sits just above the neutral line, confirming modest positive momentum rather than a stretched condition.

Immediate support is located at the Bollinger mid-line of 183.50, followed by the 182.00 zone and then the 100-day EMA around 181.70 as a more strategic floor. On the upside, initial resistance emerges at the recent swing high near 184.70, with the upper Bollinger Band projected around 185.80 capping the topside for now.

(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.