The EUR/JPY cross trades in positive territory around 182.95 during the early European session on Friday. Uncertainty surrounding the Bank of Japan (BoJ) interest rate path could weigh on the Japanese Yen (JPY) against the Euro (EUR).
BoJ Governor Kazuo Ueda warned that the Middle East conflict could materially affect Japan’s economy, signaling that the central bank may keep interest rates on hold for an extended period. Meanwhile, BoJ board member Ryozo Himino said the central bank would still make necessary policy adjustments amid market volatility, indicating that rates could move toward neutral if underlying inflation accelerates toward the target.
On the other hand, escalating conflict in the Middle East could boost safe-haven currencies such as the JPY and act as a headwind for the cross. US President Donald Trump said that Iranian officials reached out to him in an attempt to reach an agreement to end the war, but he insisted it was too late and that the US is pushing to completely destroy Iran.
European Central Bank (ECB) President Christine Lagarde is set to speak later on Friday. Also, the final reading of the Eurozone Gross Domestic Product (GDP) for the fourth quarter (Q4) will be published.
Technical Analysis:
In the daily chart, the near-term bias of EUR/JPY turns cautiously bullish as spot holds well above the 100-day exponential moving average. The cross preserves the broader uptrend despite recent consolidation below the Bollinger upper band around 185.30. Price action has pulled back from the band’s ceiling, but it continues to respect the rising middle band in the 183.30 area as dynamic resistance turned sideways. The RSI at 47.35 remains below the 50 midline, signaling only modest upside momentum, yet the absence of oversold conditions keeps the door open for renewed buying interest while the medium-term structure stays intact.
Initial resistance emerges at the February 26 high of 184.74, ahead of the Bollinger upper band at 185.30, where a daily close above would confirm a continuation toward the 186.30 region. On the downside, immediate support is seen at the March 5 low of 182.11. Below there, the 100-day EMA around 181.30 is a key structural floor that would need to hold to prevent a deeper retracement toward 180.70. As long as price trades above this EMA cluster, pullbacks are treated as corrective within a still-positive daily profile.
(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-gains-momentum-to-near-18300-as-uptrend-persists-above-100-day-ema-202603060424
