EUR/JPY Outlook

EUR/JPY is experiencing a decline for the second day in a row, trading near 176.90 during the Asian trading session on Tuesday. Looking at the daily chart indicates that this currency pair is still within a descending channel pattern, which points towards a bearish sentiment continuing.

The near-term outlook for EUR/JPY is bearish as it stays below both the 9-day and 50-day Exponential Moving Averages (EMAs). After an inability to maintain its gains earlier this month, the pair is pulling back. The 14-day Relative Strength Index (RSI) is sitting at 32.75, indicating it is just above the oversold line, suggesting that there’s still lingering downside pressure, even if the recent sell-off seems a bit extended.

On the downside, EUR/JPY has critical support levels to watch, with the initial support sitting at the lower boundary of the descending channel around 176.00. A drop below this level could bring attention to the eleven-month low of 175.70, which was recorded back in November 2025. If selling pressure mounts and pushes the currency pair below this support area, we might see even further declines, potentially towards the 14-month low at 169.72.

Conversely, the immediate resistance is seen at the nine-day EMA of 177.44, followed by the 50-day EMA at 180.47. If the pair makes a significant move above these crucial EMAs, we could see a bullish reversal, paving the way for EUR/JPY to approach the upper boundary of the descending channel around 183.90, with the all-time high of 187.95 reached on April 17 being the ultimate target.

Japanese Investors and French Bonds

Analysts at Commerzbank point out that Japanese investors have been net sellers of long-term French bonds for the past year. They note that cumulative net purchases since early 2014 have noticeably dropped since the pandemic began. Interestingly, they mention that these investors have returned as buyers in recent months. As a result, Commerzbank concludes that it’s unlikely Japanese investors were the ones triggering the recent volatility in the French bond market.