The EUR/JPY pair has shown some appreciation after starting off with a bearish gap, trading around 177.50 during the Asian session on Monday. Technical indicators from the daily chart reveal that this currency pair is still within a descending channel, indicating a continuing bearish trend.
Currently, EUR/JPY seems to have a capped movement as it remains under the 50-day Exponential Moving Average (EMA). It’s managing to stabilize slightly above the nine-day EMA, pointing to some short-term consolidation while still being part of a broader corrective movement. The 14-day Relative Strength Index (RSI), hovering around 41, reflects a lack of strong momentum, which suggests that a decisive recovery is not on the horizon.
In terms of support, EUR/JPY could test the nine-day EMA at around 177.40, with the lower boundary of the descending channel near the eleven-month low of 175.70, marked in November 2025. If selling pressure grows and the pair falls below this support zone, it could see further declines toward the 14-month low of 169.72.
Looking upward, the major resistance point is the 50-day EMA at 180.01. If the currency pair climbs above this average, it could signal a bullish reversal, allowing EUR/JPY to approach the upper boundary of its descending channel near 183.60, and even reach the all-time high of 187.95, which was noted on April 17.
Analysts at MUFG point out a shift towards a more hawkish stance from the Bank of Japan (BoJ). Bank of Japan Board Member Junko Koeda has reportedly emphasized the need for further tightening, offering a clearer warning against excessively cautious policies than she has in the past. Her remarks seem to highlight the central bank’s increasing willingness to continue normalizing its policies.
(This technical analysis was generated with the assistance of an AI tool.)
Euro FAQs
The Euro serves as the currency for the 20 countries within the Eurozone of the European Union. It’s the second most traded currency globally, following the US Dollar. For instance, in 2022, it represented 31% of all foreign exchange transactions, averaging a daily turnover exceeding $2.2 trillion. The EUR/USD pair stands as the most traded in the world, covering around 30% of transactions, while EUR/JPY accounts for 4%, EUR/GBP for 3%, and EUR/AUD for 2%.
The European Central Bank (ECB), located in Frankfurt, Germany, acts as the reserve bank for the Eurozone. It is responsible for setting interest rates and managing monetary policy. The ECB primarily aims to maintain price stability, which involves either controlling inflation or spurring growth. Adjusting interest rates is a key tool in this effort. Generally, higher interest rates—or the expectation of them—tend to support the Euro, and vice versa. The ECB Governing Council makes monetary policy decisions during eight annual meetings involving heads of national banks from the Eurozone and six permanent members, including President Christine Lagarde.
Inflation data from the Eurozone, measured by the Harmonized Index of Consumer Prices (HICP), plays a significant role for the Euro. If inflation rises unexpectedly—especially beyond the ECB’s target of 2%—it compels the ECB to increase interest rates to regain control. Relatively high interest rates compared to other currencies typically strengthen the Euro by making the region more appealing for global investors.
Economic data releases are also crucial in assessing the health of the economy and can influence the Euro. Indicators like GDP, Manufacturing and Services PMIs, employment figures, and consumer sentiment surveys all help determine the direction of the Euro. A robust economy can attract foreign investments, potentially leading the ECB to raise interest rates, consequently strengthening the Euro. Conversely, weak economic data generally leads to a decrease in the Euro’s value. Data from the four largest economies in the Eurozone—Germany, France, Italy, and Spain—are particularly significant as they represent 75% of the region’s economy.
Another important metric for the Euro is the Trade Balance, which assesses the difference between earnings from exports and spending on imports over a set period. If a country produces highly desirable exports, its currency may appreciate due to increased demand from foreign buyers. Thus, a positive Trade Balance can fortify a currency, while a negative one tends to weaken it.
