EUR/JPY Price Forecast: Gathers strength above 184.50, but remains capped below Bollinger midpoint
- EUR/JPY strengthens to around 184.80 in Monday’s early European session.
- Further consolidation cannot be ruled out as the cross remains under the Bollinger middle band, with neutral RSI momentum.
- The first support level to watch is 184.30; the immediate resistance level is located at 185.30.
The EUR/JPY cross gathers strength to near 184.80, snapping the four-day losing streak during the early European trading hours on Monday. A hawkish tone from the European Central Bank (ECB) provides some support to the Euro (EUR) against the Japanese Yen (JPY).
ECB Governing Council member Yannis Stournaras said over the weekend that a modest ECB interest-rate increase could temper inflation without causing economic damage. Meanwhile, Governing Council member Boris Vujcic stated on Friday that the decision on whether to increase interest rates in June will hinge on incoming information.
Traders will keep an eye on the preliminary reading of Japan’s Gross Domestic Product (GDP) for the first quarter (Q1), which is due later on Tuesday. The Japanese economy is estimated to grow by 0.4% in Q1, compared to 0.3% in the previous reading. Any signs of growth in Japan could help limit the JPY’s losses in the near term.
Technical Analysis:
In the daily chart, EUR/JPY is hovering just under the Bollinger middle band, leaving the short-term tone neutral to slightly capped while it holds beneath this reference level, with additional upside space toward the upper band. The 14-day Relative Strength Index at 47.75 sits near the midline, hinting at a lack of clear directional momentum after the recent pullback.
On the downside, initial support is seen at the 100-day simple moving average (SMA) at 184.30, with a more significant floor emerging near the May 7 low of 183.50 if selling pressure resumes. The next contention level to watch is the lower Bollinger band at 182.85.
On the topside, a daily close above the Bollinger middle band at 185.30 would ease immediate downside pressure and open the way toward the February 9 high of 186.24. The next hurdle emerges at the upper band resistance at 187.78.
(The technical analysis of this story was written with the help of an AI tool.)
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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