EUR/JPY halts its four-day losing streak, trading around 179.20 during Asian hours on Thursday. Technical analysis of the daily chart shows that the currency cross remains confined within a descending channel pattern. This continuous formation reinforces a persistent bearish outlook for the pair.
The EUR/JPY cross is retaining a bearish near-term bias as it holds below both the nine- and 50-day Exponential Moving Averages (EMAs). Price below these key averages suggests rallies are likely to be capped. At the same time, the 14-day Relative Strength Index (RSI) at 40.46 remains in neutral-to-soft territory, hinting at limited upside momentum rather than outright oversold conditions.
The EUR/JPY cross may fall toward the lower boundary of the descending channel at 176.80, followed by an 11-month low of 175.70, recorded in November 2025.
On the upside, the EUR/JPY cross is testing the nine-day EMA at 179.22. A successful break above the short-term price average could trigger a bullish reversal and support the cross as it tests the 50-day EMA at 181.74. Further resistance lies at the upper boundary of the descending channel around 184.40, followed by the all-time high of 187.95 set on April 17.
BoJ tightening path seen as gradual, with hikes spaced every three months
Analysts at MUFG/BTMU highlight that former BoJ official Kazuo Momma’s guidance on the likely pace of tightening aligns closely with their own projections. They note that he believes the “basic pace will probably be once every three months,” a trajectory MUFG/BTMU see as consistent with their forecast for “another hike before the end of this year at the December policy meeting.”
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
