EUR/JPY Price Forecast: Trades around 176.50 above nine-day EMA

EUR/JPY may test the immediate support at the nine-day EMA of 176.33.
The 14-day Relative Strength Index is at 42.64, indicating weak upside momentum.
The primary barrier lies at the descending channel's upper boundary near 178.00.

EUR/JPY gains ground after recovering recent losses from the previous trading day, hovering around 176.40 during Asian hours on Monday. Based on the technical analysis of the daily chart's descending channel pattern, the currency cross maintains a clear bearish bias.

The EUR/JPY cross is maintaining a bearish near-term bias as it holds below the 50-day Exponential Moving Average (EMA). The cross is showing only modest stabilization, with price trading just above the nine-day EMA, while the 14-day Relative Strength Index (RSI) at 42.64 remains below the neutral 50 line and hints at subdued upside momentum rather than a decisive recovery.

TMGM талдауы: Қаржы нарығы жаңалықтары, экономикалық күнтізбе және нарықтық шолулар

The EUR/JPY cross may test the immediate support at the nine-day EMA of 176.33, 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 174.40. 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 near 178.00, followed by the 50-day EMA of 178.79. 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.

Dollar stays on the back foot as tech rout collides with Fed hawkishness

Brown Brothers Harriman’s Elias Haddad argues that the ongoing tech sell-off is likely to keep the Dollar under pressure in the near term, with “the USD index (DXY) likely to test support at 101.00.” However, he stresses that “strong US economic activity and rising price pressures reinforce the Fed’s hawkish bias, keeping rate differentials supportive of USD,” suggesting that any downside in the Dollar may be tempered by underlying macro and policy support.

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

Euro FAQs

What is the Euro?

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

What is the ECB and how does it impact the Euro?

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

How does inflation data impact the value of the Euro?

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

How does economic data influence the value of the Euro?

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

How does the Trade Balance impact the Euro?

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

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