The EUR/JPY pair is losing momentum near 184.50 during the early European session on Thursday. The Japanese yen (JPY) rose against the euro (EUR) as traders remained wary of intervention following strong pre-election warnings in Japan. Japanese Finance Minister Satsuki Katayama issued another verbal warning on Wednesday, saying officials would take “appropriate action against excessive foreign currency movements without ruling out any options.”
On the other hand, signs that the European Central Bank is approaching the end of its interest rate cutting cycle may provide some support to the euro. Financial markets currently see limited scope for immediate action, with interest rates likely to remain unchanged at the next meeting. Some analysts expect a rate cut later in 2026, although a rate hike is considered unlikely given declining inflation.
Technical analysis:
On the daily chart, EUR/JPY is holding above the bullish 100 EMA at 179.01, maintaining a bullish bias. The price is trading in the upper half of the Bollinger envelope and the bands are showing a slight contraction, indicating a pause during the advance. The RSI at 59.76 is a neutral, bullish indicator, showing strong momentum. Immediate resistance stands at the upper band at 185.20, while initial support is at 184.00.
A daily close above 185.20 could extend the move as volatility rebuilds from the recent range contraction. Failure to cross this limit would expose the lower band at 182.76, and a deeper pullback would test the 100 EMA at 179.01. An RSI holding above 50 would favor a continuation, while a decline towards this limit might indicate consolidation within the range.
(The technical analysis for 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.
