The EUR/JPY cross loses traction to around 183.20 during the early European session on Tuesday. The Japanese Yen (JPY) strengthens against the Euro (EUR) as escalating conflict in the Middle East boosts safe-haven demand.
On the other hand, uncertainty surrounding the Bank of Japan (BoJ) interest rate path might weigh on the JPY against the EUR. BoJ Governor Kazuo Ueda last week signaled a likely prolonged hold on interest rates due to the potential economic impact of the Middle East conflict. While some analysts expected a BoJ March hike, many now anticipate the Japanese Yen central bank to stand pat until at least April or July, according to Reuters.
Technical Analysis:
In the daily chart, the near-term bias of EUR/JPY is mildly bullish as the cross is well-supported above the rising 100-day EMA. The RSI has retreated toward the 50 line from overbought territory, signalling fading upside momentum rather than a clear trend reversal.
Initial support emerges at 182.90, ahead of the stronger confluence around 181.30 where the 100-day EMA underpins the broader uptrend, with a break there exposing 180.00 as the next downside level. On the topside, resistance sits at 184.85, followed by the recent swing high at 185.70, where proximity to the upper Bollinger Band has previously capped advances and would need to give way to revive a sustained bullish extension.
(The technical analysis of this story was written with the help of an AI tool.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Source: https://www.fxstreet.com/news/eur-jpy-price-forecast-softens-below-18350-on-safe-haven-demand-but-holds-mildly-bullish-outlook-202603100520
