EUR/JPY Price Forecast: Retreats to around 175.50 as bearish signals strengthen downside bias

• Near 175.65, EUR/JPY edges lower in early European trading on Wednesday.
• Bearish RSI momentum reinforces the cross’s negative bias below the 100-day SMA.
• Support initially lies at 175.45, while 176.43 marks the first resistance level.

At around 175.65, EUR/JPY remains lower in Wednesday’s early European session. Concerns over currency intervention by Japanese authorities are supporting the Japanese Yen (JPY) against the Euro (EUR).

The government was prepared to act decisively in the currency market, Japanese Finance Minister Satsuki Katayama said on Tuesday. Officials would scrutinise market movements with a heightened sense of urgency, including at the present moment, Katayama added.

For a fresh catalyst, traders are looking to the European Central Bank (ECB) interest rate announcement later on Thursday. The Bank of Japan (BoC) policy meeting will then become the focus on Friday.

Following a 25 basis points (bps) increase in its three key policy rates in September, the ECB is likely to leave rates unchanged when it announces its decision on Thursday. Nevertheless, high oil prices and inflation risks continue to underpin strong expectations of rate increases at later meetings.

An unchanged policy rate of 1.25% is expected when the BoJ concludes its two-day meeting on Friday. Reuters reports indicate that the Japanese central bank is also anticipated to announce at this meeting that its 2% “underlying inflation” target has been achieved.

Yen faces pressure as cautious BoJ stance keeps intervention risk at bay

Official intervention is still some distance away, in the view of MUFG/BTMU analysts, who note that “we are likely still some distance from that with the 160-level the obvious point in which those threats could turn into action.” With investors likely to expect caution from BoJ Governor Ueda, the analysts add that “the yen may well struggle through this week with investors likely anticipating BoJ Governor Ueda being more cautious in his words on Friday given the global backdrop.”

Although MUFG/BTMU anticipate that the BoJ will recognise the need for additional tightening, they warn that its message may disappoint market expectations. They state that “the BoJ will be mindful of that and while we expect the BoJ to signal more rate hikes are necessary, Ueda’s style of communication suggests he may not provide a strong message on a move in December that remains 80% priced.”

Yen gains support as BoJ’s Himino highlights AI investment and inflation risks

A score of 8.2 on FXS Speechtracker puts BoJ’s Himino precisely at the speaker’s historical average. Even so, the focus on increasing underlying inflation and inflation expectations gives the remarks a hawkish slant. Strong AI-led capital expenditure, resilient exports, accommodative financial conditions and rapid growth in bank lending all feature in the remarks, highlighting that real interest rates are still low and upside risks to prices are gaining prominence.

Greater readiness to tighten policy in pursuit of price stability is suggested by the warning that delaying policy adjustments could create inflation risks and harm the economy. In currency markets, underlying inflation close to target, together with heightened upside price risks, reinforces expectations of further policy normalisation. That combination is supportive of the Yen, particularly against low-yielding currencies.

Technical Analysis: EUR/JPY retains bearish bias below the 100-day SMA

With spot trading well beneath both the 100-day Moving Average (MA) and the Bollinger Bands’ 20-day simple moving average, the daily chart points to a bearish short-term outlook for EUR/JPY. The Relative Strength Index (14) stands at 32.67, close to oversold levels, as the price hovers just above support at the lower Bollinger Band. Together, these readings suggest that selling pressure remains dominant, although the decline is already stretched.

The lower Bollinger Band at 175.45 provides the first significant downside support. Below that, a decisive break would bring the 23 October low of 175.10 into view, ahead of the 6 October 2025 low at 174.74.

The 26 October high at 176.43 offers the first resistance on a recovery, followed by the middle Bollinger Band around 177.00 and  the upper Bollinger Band near 178.50. Sustained buying beyond that level could open the way towards the psychological 180.00 mark and then the 100-day MA at 182.20. 

(The technical analysis of this story was written with the help of an AI tool. Know more.)