177.50: EUR/JPY price forecast as pair trades nearby after climbing above nine-day EMA

177.00 marks initial support at the nine-day EMA, towards which EUR/JPY could retreat.
Near 49, the 14-day Relative Strength Index points to price consolidation.
Around 178.40, the descending channel’s upper boundary forms the main resistance.

EUR/JPY trades near 177.30. The cross is advancing for a second consecutive day during Tuesday’s Asian session. On the daily chart, technical analysis indicates that trading remains inside a descending channel, signalling that the prevailing bias is bearish.

Below the 50-day Exponential Moving Average (EMA), EUR/JPY retains a slightly bearish bias, although the nine-day EMA continues to provide near-term support. Medium-term overhead supply therefore appears to be limiting rallies. However, with the 14-day Relative Strength Index (RSI) near 49, the downside phase looks more like consolidation than an impulsive decline.

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At 177.00, the nine-day EMA could provide EUR/JPY’s first support. Next comes the 12-month low of 175.07 recorded on 30 October, followed by the descending channel’s lower boundary near 174.00. Should the cross break beneath the channel, it would open the way towards the area around the 15-month low of 169.72.

A move higher could take EUR/JPY towards 178.40, near the descending channel’s upper boundary and the 50-day EMA at 178.47. Clearing that medium-term moving average would trigger a bullish reversal. This would support a move towards the area around the all-time high of 187.95 set on 17 April.

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

Intervention and USD/JPY resistance support Yen resilience

Among this year’s notable outperformers is the Yen, according to Rabobank strategists, who observe that “the JPY is the second best performing G10 currency in the half year to date.” They acknowledge that this position has “been obtained with the support of sizeable FX intervention over 3 days during the summer, which included joint support with the US Treasury,” while emphasising that recent price action has provided more organic support. They specifically point out that “the JPY has managed to outperform the USD on a 1-month view,” alongside “a clear reluctance to push USD/JPY above the 158.70 area which coincides with the 200-day sma,” in the market. This highlights the importance of that technical threshold for USD/JPY.

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

Japanese Yen: Key Questions

Which factors shape the Japanese Yen’s value?

Among the most actively traded currencies globally, the Japanese Yen (JPY) broadly reflects Japan’s economic performance. More specific influences include Bank of Japan policy, the gap between Japanese and US bond yields, and traders’ appetite for risk, alongside other factors.

How does Bank of Japan policy affect the Japanese Yen?

Currency control is part of the Bank of Japan’s mandate, making its actions important for the Yen. Although the BoJ has occasionally intervened directly in foreign exchange markets, usually to weaken the Yen, political concerns among Japan’s main trading partners discourage frequent intervention. Between 2013 and 2024, its ultra-loose monetary policy drove Yen depreciation against major peers as policy increasingly diverged from that of other leading central banks. More recently, the gradual withdrawal of this ultra-loose stance has provided the Yen with some support.

Why does the US–Japan bond yield gap matter for the Japanese Yen?

By maintaining ultra-loose monetary policy over the past decade, the BoJ increasingly diverged from other central banks, especially the US Federal Reserve. This helped widen the yield gap between 10-year US and Japanese bonds, favouring the US Dollar over the Japanese Yen. That gap is now narrowing as the BoJ’s 2024 decision to gradually withdraw its ultra-loose policy coincides with interest rate cuts by other major central banks.

How does risk appetite influence the Japanese Yen?

Often regarded as a safe-haven investment, the Japanese Yen tends to attract investors during periods of market stress because of its perceived reliability and stability. As a result, turbulent conditions are likely to lift the Yen against currencies considered riskier investments.