EUR/JPY Price Forecast: Trades near 177.50 after rising above nine-day EMA

EUR/JPY could fall toward the initial support at the nine-day EMA of 177.00.
The 14-day Relative Strength Index near 49 suggests price consolidation.
The primary barrier lies at the upper boundary of the descending channel around 178.40.

EUR/JPY gains ground for the second successive day, trading around 177.30 during Asian hours on Tuesday. The technical analysis of the daily chart suggests that the currency cross is remaining within a descending channel pattern, indicating a prevailing bearish bias.

The EUR/JPY cross is maintaining a mildly bearish bias as it holds below the 50-day Exponential Moving Average (EMA) while clinging to short-term support from the nine-day EMA. This configuration suggests rallies remain capped by medium-term supply overhead, even as the 14-day Relative Strength Index (RSI) near 49 hints at a consolidative rather than impulsive downside phase.

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The EUR/JPY cross could find the initial support at the nine-day EMA of 177.00, followed by the 12-month low of 175.07, reached on October 30. Further support lies at the lower boundary of its descending channel around 174.00. A break below the channel would open the door for the currency cross to navigate the region around the 15-month low at 169.72.

On the upside, the EUR/JPY cross may rise toward the upper boundary of the descending channel around 178.40, aligned with the 50-day EMA of 178.47. A successful break above the medium-term price average would cause a bullish reversal, supporting the EUR/JPY cross to explore the area around the all-time high of 187.95, reached on April 17.

Chart Analysis EUR/JPY — EUR/JPY: Daily Chart

Yen resilience underpinned by intervention and key USD/JPY resistance

Strategists at Rabobank highlight that the Yen has been a notable outperformer this year, observing that “the JPY is the second best performing G10 currency in the half year to date.” They acknowledge that this standing has “been obtained with the support of sizeable FX intervention over 3 days during the summer, which included joint support with the US Treasury,” but stress that recent price action has been more organically supportive. In particular, they note that “the JPY has managed to outperform the USD on a 1-month view,” with the market showing “a clear reluctance to push USD/JPY above the 158.70 area which coincides with the 200-day sma,” underscoring the significance of that technical threshold for the pair.

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

Japanese Yen FAQs

What key factors drive the Japanese Yen?

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.

How do the decisions of the Bank of Japan impact the Japanese Yen?

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.

How does the differential between Japanese and US bond yields impact the Japanese 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.

How does broader risk sentiment impact the Japanese Yen?

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.