EUR/JPY Price Forecast: Gains ground to near 185.00, holding modest bullish bias above key support

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The EUR/JPY cross trades in positive territory around 184.90 during the early European trading hours on Tuesday.

EUR/JPY edges higher to near 184.90 in Tuesday’s early European session.
The cross keeps a modest bullish tone, but further consolidation cannot be ruled out with neutral RSI momentum.
The first upside barrier emerges at 185.90; the initial support level to watch is 184.85.

The EUR/JPY cross trades in positive territory around 184.90 during the early European trading hours on Tuesday. The Japanese Yen (JPY) edges lower against the Euro (EUR) after reports that Japanese officials had no imminent plans to change the asset allocations of their state pension funds, tempering expectations of near-term support for domestic assets.

Japan’s Finance Minister Satsuki Katayama said on Tuesday that the government may consider a pension asset allocation tweak if the environment changes. Traders remain on alert for possible intervention from Japanese authorities.

Technical Analysis:

In the daily chart, EUR/JPY holds above the 100-day Simple Moving Average (SMA) and the Bollinger Bands’ 20-period middle line, which together underpin a modest bullish bias. Price is also well above the lower Bollinger band, while the upper band at 185.89 caps the immediate topside. The Relative Strength Index (RSI) at 49.62 sits close to neutral, hinting at a consolidative tone with a slight upward tilt rather than strong directional momentum.

On the topside, initial resistance emerges at the upper Bollinger band around 185.90, where a clear break would open the way for the June 17 high of 186.32, en route to the April 29 high of 187.42.

On the downside, nearby support is seen at the 100-day SMA at 184.85, followed by the Bollinger middle band at 184.75, with the lower band down at 183.65 acting as a more distant structural floor should corrective pressure deepen.

(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.