EUR/JPY Price Forecast: Bullish outlook prevails above 181.00

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EUR/JPY softens to around 181.05 in Friday’s early European session.
A positive view of the cross remains intact above the 100-day EMA, with the bullish RSI indicator.
The initial support level is seen at 179.41.

The EUR/JPY cross trades in negative territory near 181.05 during the early European session in Friday. The Japanese Yen (JPY) edges higher against the Euro (EUR) amid some verbal intervention from Japanese authorities. Traders brace for the release of Germany’s Retail Sales and Consumer Price Index (CPI) inflation data, which will be released later on Friday.

In the daily chart, EUR/JPY trades at 181.04. Price holds well above the rising 100-EMA at 174.71, sustaining the medium-term uptrend. The slope of the average has steepened in recent weeks, reinforcing bullish control. RSI at 63.77 is firm but not overbought, easing from 65.56 and indicating momentum has cooled slightly.

Price trades above the middle Bollinger Band and leans toward the upper band at 182.67, while the bands widen, signaling persistent bullish pressure and elevated volatility. A daily close through the upper band could extend the advance, whereas a pullback under 179.41 would expose a support range at 176.15–174.71.

(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.