The EUR/JPY pair is losing momentum near 184.35 during the early European session on Monday. The Japanese yen (JPY) rose against the euro (EUR) amid concerns about escalating tensions between the US and Venezuela and continued geopolitical uncertainty caused by tensions between Israel and Iran, boosting safe haven flows.
In addition, verbal intervention from Japanese officials may provide some support to the Japanese yen and act as a headwind for the pair. Atsushi Mimura, Japan’s chief foreign exchange official, said on Monday that he was concerned about the foreign exchange movements and would take appropriate action against excessive measures.
Technical analysis:
On the 4-hours chart, EUR/JPY is holding above the bullish 100 EMA at 182.02, strengthening the short-term bullish bias. The average continues to rise, in line with higher lows. The Bollinger bands have widened and the price is hovering just below the upper band at 185.00, indicating strong upward momentum and extended conditions. The RSI at 69.51 is near the overbought zone, confirming strong buying pressure.
Volatility expansion within the Bollinger band favors trend continuation, but failure to clear the upper band would encourage consolidation. Pullbacks could test the middle band at 183.13, while the 100-EMA at 182.02 and the lower band at 181.27 would support deeper corrections. A decisive break above the upper band would extend the rally, while a close below the midline could shift momentum toward range normalization.
(Technical analysis of this story was written with the help of an artificial intelligence tool)
Frequently asked questions about the Japanese Yen
The Japanese Yen (JPY) is one of the most widely traded currencies in the world. Their value is determined broadly by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the spread between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the powers of the Bank of Japan is to control the currency, so its movements are key to the yen. The Bank of Japan has intervened directly in currency markets on occasion, generally to devalue the yen, although it often refrains from doing so due to the political concerns of its major trading partners. The Bank of Japan’s ultra-loose monetary policy between 2013 and 2024 caused the yen to depreciate against its major counterparts due to the growing policy divergence between the Bank of Japan and other major central banks. More recently, the gradual dismantling of this ultra-lenient policy has given the yen some support.
Over the past decade, the Bank of Japan’s ultra-loose monetary policy stance has led to widening policy divergence with other central banks, especially the US Federal Reserve. This supported the widening of the spread between the US and Japanese 10-year bonds, which favored the US dollar against the Japanese yen. The Bank of Japan’s decision in 2024 to gradually abandon ultra-loose policy, along with interest rate cuts at other major central banks, are narrowing this spread.
The Japanese yen is often viewed as a safe investment. This means that in times of market stress, investors are more likely to put their money into the Japanese currency because of its supposed reliability and stability. Turbulent times are likely to strengthen the value of the yen against other currencies that are considered riskier to invest in.
