EUR/JPY Price Forecast: Gathers strength to near 185.50, BoJ rate decision looms
- EUR/JPY drifts higher to around 185.45 in Thursday’s early European session.
- Improved risk sentiment undermines the safe-haven Japanese Yen.
- The initial support level to watch is 184.10; the first upside barrier emerges at 185.65.
The EUR/JPY cross attracts some buyers near 185.45 during the early European trading hours on Thursday. The Japanese Yen (JPY) strengthens against the Euro (EUR) on improved sentiment. US President Donald Trump withdrew a threat to impose tariffs on eight European nations and announced a framework for a Greenland deal. These developments put the safe-haven currency, such as the JPY, on the back foot and create a tailwind for the cross.
All eyes will be on the Bank of Japan (BoJ) interest rate decision on Friday, which is widely expected to hold its policy rate steady at around 0.75% at its January meeting. The Japanese central bank last raised its rate to the highest in three decades in December 2025. Traders await additional clues from Governor Kazuo Ueda's press conference regarding the expected timing of the BoJ's next rate hike. Any hawkish comments from Ueda could support the Japanese Yen against the Euro in the near term.
Technical Analysis:
In the daily chart, EUR/JPY holds decisively above the 100-day EMA, keeping the medium-term bias pointed higher. RSI (14) prints 61.93, showing positive momentum without overbought conditions.
Bollinger Bands widen as price hovers near the upper envelope, underscoring firm bullish pressure. Initial support sits at the middle band at 184.10, with 182.57 as the next cushion, while resistance aligns with the upper band at 185.65. A breakout above that barrier could extend the trend, whereas a pullback would keep the pair anchored between the bands.
(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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