EUR/JPY Price Forecast: Retains bullish bias above 166.00
- EUR/JPY faces some selling pressure to around 166.35 in Thursday’s early European session.
- The cross maintains a constructive view above the 100-day EMA, with a bullish RSI indicator.
- The immediate resistance level is seen at 167.62; the initial support level is located in the 166.05-166.00 zone.
The EUR/JPY cross attracts some sellers to near 166.35 during the early European trading hours on Thursday. The Japanese Yen (JPY) gathers strength against the Euro (EUR) as Middle East tensions dampen sentiment. Traders brace for Japan’s May National Consumer Price Index (CPI) data and Bank of Japan (BoJ) Monetary Policy Meeting Minutes, which will be published later on Friday.
Technically, EUR/JPY keeps the bullish vibe on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). The upward momentum is supported by the 14-day Relative Strength Index (RSI), which stands above the midline near 62.00. This suggests bullish momentum in the near term.
The first upside target to watch for the cross is seen at 167.62, the high of June 17. Extended gains could see a rally to the upper boundary of the Bollinger Band of 167.85. Further north, the next hurdle is located at the 170.00 psychological mark.
On the other hand, the initial support level for EUR/JPY emerges at the 166.05-166.00 region, representing the low of June 16 and the round figure. A breach of this level could expose 164.22, the low of June 6. The key contention level to watch is 162.88, the 100-day EMA.
EUR/JPY Daily Chart
Japanese Yen FAQs
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.
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.
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.
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.
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