EUR/JPY Price Forecast: Strengthens above 177.00, but bearish bias persists below key resistance

EUR/JPY holds positive ground around 177.10 in Thursday’s early European session.
The negative tone of the cross remains intact below the 100-day, with bearish RSI momentum.
The initial support level to watch is 175.65; the immediate resistance level emerges at 178.35.

The EUR/JPY cross trades in positive territory near 177.10 during the early European trading hours on Thursday. However, the potential upside for the cross might be limited as traders remain on high alert for currency intervention from Japanese authorities.

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

Japanese Finance Minister Satsuki Katayama warned that she was prepared to take action in the currency market again if needed following hotter US inflation figures. She emphasized that there has been no change in the stance of the US and Japan since their joint intervention to prop up the Japanese Yen (JPY) in July.

On Wednesday, European Central Bank (ECB) Governing Council member Pierre Wunsch stated that the central bank will likely need to raise interest rates further. Wunsch said that "we are probably going to have to hike again" due to inflation that's approaching 4%, but noted there is uncertainty on the energy front and with AI.

ECB President Christine Lagarde said that France should solve its debt woes through fiscal consolidation, damping speculation about whether the central bank might start buying French bonds to contain yields.

France risk premia anchored by political fragmentation and Le Pen scenario

Analysts at ABN Amro frame the political backdrop as a key driver of France’s risk profile, noting that “as things currently stand it appears as if Le Pen will win the race to be France’s next President.” They highlight Rabo’s economists’ baseline that a Le Pen presidency would likely be marked by “a fractious relationship with the EU regarding policymaking” while she is still expected “to maintain her existing position of neither wanting to disband the EU entirely nor pursue an Euro exit.”

Looking beyond the presidential race, ABN Amro also underscores the structural nature of France’s political fragmentation. In their view, “it seems likely that no political grouping will emerge with an absolute majority if elections are held in H1 2027.” They argue this would simply entrench the current environment of “low government stability/ ability to pass a budget/ policy coherence/ reform capacity,” which they describe as “clearly a concern because, in a situation of unchanged government policy, France’s budget deficit is set to significantly deteriorate over the upcoming two years.”

Technical Analysis: EUR/JPY keeps a bearish vibe under the 100-day SMA

In the daily chart, EUR/JPY remains under clear bearish pressure as spot holds below the 20-period Bollinger simple moving average and the 100-day simple moving average, keeping price confined to the lower half of the recent volatility envelope. The Relative Strength Index (14) at 37.56 is recovering from oversold territory but still below the 50 line, which only mildly tempers the downside bias rather than signaling a sustainable base.

On the downside, the lower limit of Bollinger band at 175.65 offers the next notable support zone. A daily close beneath this level would reopen the path toward the October 20 low, 2025 of 175.34, followed by the October 2, 2025 low of 172.27.

On the bright side, the first upside barrier emerges at the Bollinger middle band at 178.35, en route to the 180.00 psychological level. Any follow-through buying above this level could pave the way to

the upper boundary of Bollinger band at 181.00 and then the 100-day SMA at 183.00.

(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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