176.50: EUR/JPY Holds Above Level Near Nine-Day EMA | Price Forecast

176.45 is the immediate support EUR/JPY may test at its nine-day EMA.
At 44.16, the 14-day Relative Strength Index points to limited downward momentum.
Near 177.90, the descending channel's upper boundary forms the main resistance.

176.70 is the approximate level for EUR/JPY during Tuesday's Asian session. The cross edges down after a modest advance the previous day. On the daily chart, trading remains confined to a descending channel, pointing to a continued bearish bias.

With the 50-period Exponential Moving Average (EMA) still capping gains, EUR/JPY sits just above its nine-period EMA. Trading below the longer-term average gives the cross a mildly bearish tone. However, the 14-day Relative Strength Index (RSI) remains in neutral territory at 44.16, signalling limited downward momentum rather than heavy selling.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

At 176.45, the nine-day EMA provides the immediate support being tested by EUR/JPY. Below that sits the 12-month low of 175.07 recorded on 30 October, followed by the descending channel's lower boundary around 174.30. A breach of the channel floor would leave scope for the cross to move towards the region of its 15-month low at 169.72.

Near 177.90, the channel's upper boundary is a potential upside target for EUR/JPY, ahead of the 50-day EMA at 178.72. Clearing that medium-term moving average would trigger a bullish reversal and support a move towards the all-time high of 187.95 set on 17 April.

Europe’s fiscal and energy risks constrain Euro appeal

A weaker Dollar does not necessarily offer a strong investment case for the Euro, according to analysts at DBS Group Research. They warn that “Europe’s fiscal and political uncertainties, particularly in France, and its vulnerability to elevated energy prices complicate the search for viable alternatives.” In their view, these combined risks restrict investors' ability to shift confidently from the Dollar into Eurozone assets, notwithstanding recent currency movements.

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

Euro: Key Questions

20 EU Countries: Where Is the Euro Used?

Used by the 20 European Union countries in the Eurozone, the Euro ranks behind only the US Dollar in global currency trading. Its share of all foreign exchange transactions reached 31% in 2022, with average daily turnover exceeding $2.2 trillion. An estimated 30% of all transactions involve EUR/USD, making it the world's most actively traded currency pair. Next come EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

ECB Policy: What Drives Its Influence on the Euro?

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone's central bank, setting interest rates and directing monetary policy. Price stability is its core mandate, pursued by curbing inflation or supporting growth. Interest rate increases and cuts are its main policy instruments. Higher rates relative to other economies, or expectations of rate rises, generally support the Euro; the reverse also applies. Monetary policy is decided by the ECB Governing Council at eight meetings each year. The decision-makers comprise the heads of Eurozone national central banks and six permanent members, among them ECB President Christine Lagarde.

2% Inflation Target: How Do Price Data Affect the Euro?

Measured through the Harmonised Index of Consumer Prices (HICP), Eurozone inflation is a key economic indicator for the Euro. A higher-than-expected reading, particularly above the ECB's 2% target, obliges the central bank to increase interest rates to regain control of inflation. When the region's interest rates are comparatively high, global investors have a greater incentive to place funds there. This typically supports the Euro.

Economic Indicators: What Moves the Euro?

The Euro can respond to economic releases because they reveal the economy's condition. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys are among the indicators that can shape the single currency's direction. Economic strength supports the Euro by drawing in foreign investment and potentially prompting the ECB to raise interest rates, directly strengthening the currency. Weak figures, by contrast, are likely to weigh on the Euro. Particular attention goes to Germany, France, Italy and Spain. Together, these four largest euro area economies represent 75% of the Eurozone economy, making their data especially important.

Trade Balance: How Does It Shape Euro Demand?

The Trade Balance is another key release for the Euro. Over a specified period, it compares a country's export earnings with its spending on imports. Strong overseas demand for a country's exports creates additional demand for its currency as foreign buyers purchase those goods, lifting its value. A positive net Trade Balance therefore supports a currency, while a negative balance has the opposite effect.