EUR/JPY Price Forecast: Strengthens to near 181.00 amid bullish technical signals
- EUR/JPY strengthens to around 180.90 in Monday’s early European session.
- The cross maintains the constructive outlook above the key 100-day EMA, with bullish RSI momentum.
- The immediate resistance level is seen at 182.02; the initial support is located at 178.98.
The EUR/JPY cross gains ground to near 180.90 during the early European session on Monday. The Japanese Yen (JPY) softens against the Euro (EUR) amid the weaker-than-expected revised Gross Domestic Product (GDP) report. Data released by the Cabinet Office on Monday showed that Japan's economy shrank 0.6% in the July-September period compared with the initial estimate of 0.4%. On a yearly basis, the economy contracted by 2.3%, versus a 1.8% fall reported in the initial estimate.
Nonetheless, the downside for the JPY might be limited amid hawkish Bank of Japan (BoJ) expectations. Japan's wage growth data reaffirmed market bets for an imminent rate hike by the Japanese central bank in December.
Technical Analysis:
In the daily chart, EUR/JPY trades at 180.90. The pair holds above the 20-day SMA at 180.50 and the 100-day EMA at 175.53, preserving an upward bias. The 100-day EMA rises, reinforcing underlying demand. RSI at 59.40 (neutral-to-bullish) confirms steady momentum without overbought risk. Immediate hurdle stands at the upper Bollinger Band at 182.02, while initial support aligns with the lower band at 178.98.
Price sits just above the middle Bollinger Band as the bands narrow, signaling reduced volatility and a consolidative tone within the broader uptrend. A daily close above the upper band would extend gains, while a break back below the mid-band would expose the lower band and the rising 100-day EMA as successive supports.
(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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