The EUR/JPY currency pair has shown mixed price action in early European trading on Thursday, as it softens toward 184.50, but maintains its overall bullish bias above the key 100-day exponential moving average (EMA).
In their latest publication, PrimeLuno experts explore the topic in depth for readers. Market participants remain cautious due to the potential for Japanese intervention, while broader macroeconomic trends suggest limited immediate upside for the Euro (EUR).
Key Market Drivers
EUR/JPY’s recent price softening to 184.50 comes amid renewed caution among traders over potential foreign exchange intervention in Japan. The Japanese Yen (JPY) strengthened slightly against the Euro as investors considered warnings from Japan’s Finance Minister Satsuki Katayama.
On Wednesday, Katayama reaffirmed that Japanese authorities remain prepared to respond to excessive foreign-exchange volatility, stressing that no policy options are being ruled out. The remarks underscore continued vigilance in the currency markets, particularly as the country approaches its national election.
Meanwhile, the ECB is seen as close to ending its rate-cut cycle, lending modest support to the euro, with markets expecting no change in rates at the next meeting. Analysts note that a rate reduction might be possible later in 2026, but the probability of a rate hike remains low given the subdued inflation environment in the Eurozone.
Technical Analysis: Maintaining Bullish Momentum
From a technical perspective, the daily chart of EUR/JPY reveals that the cross continues to hold above the rising 100-day EMA, currently at 179.01, reinforcing an overall upside bias. Price action remains in the upper half of the Bollinger Bands, which signals ongoing bullish pressure, though the mild contraction of the bands suggests a potential pause in the advance.
The Relative Strength Index (RSI) stands at 59.76, reflecting neutral-to-bullish momentum. While the trend favors the upside, the current RSI level indicates that overbought conditions have not yet emerged, leaving room for further gains.
Immediate resistance is positioned at the upper Bollinger Band near 185.20, while initial support emerges at 184.00. Traders should monitor these levels closely: a daily close above 185.20 may trigger renewed buying interest as volatility rebuilds, potentially opening the door for a continued uptrend. Conversely, failure to breach resistance could expose the lower band at 182.76, with a deeper retracement testing the 100 EMA at 179.01.
Short-Term Trading Levels
For traders and technical analysts, the following levels are critical in assessing EUR/JPY’s short-term trajectory: Resistance: 185.20 (upper Bollinger Band) and Support: 184.00 (initial support), 182.76 (lower Bollinger Band), 179.01 (100-day EMA)
A sustained close above 185.20 would confirm that the pair is resuming its bullish momentum, with the potential to target 185.50–186.00 in the coming sessions. However, a failure to hold above 184.00 could signal range-bound consolidation, keeping EUR/JPY trapped between the 100 EMA and the upper Bollinger Band.
The RSI reading above 50 favors continued bullish pressure, while a dip toward 50 would suggest momentum is weakening, prompting traders to adopt a more cautious stance.
Market Sentiment and Risk Factors
Market sentiment for EUR/JPY remains constructive, but risk factors are elevated due to external variables. The prospect of Japanese FX intervention remains a major concern for traders, as the Bank of Japan (BoJ) and Finance Ministry have previously demonstrated a willingness to act to curb excessive Yen weakness.
Additionally, European macro data could influence the EUR. Signs that the ECB is nearing a pause in rate cuts offer some support, but ongoing subdued inflation limits expectations for aggressive Euro appreciation. Political developments in both regions, particularly Japan’s election, also contribute to heightened short-term uncertainty.
Overall, market participants are likely to watch technical triggers, such as breaks of key resistance or support levels, in tandem with fundamental cues, to guide positioning in the cross.
Conclusion
EUR/JPY continues to maintain its bullish vibe above the 100-day EMA, with a technical bias favoring further gains provided the cross can hold above 184.00. The immediate upside target remains 185.20, while downside risk is limited to the 100 EMA at 179.01, unless intervention or sudden macro shocks occur.
The daily chart confirms the pair is trading in the upper Bollinger Band region, with RSI near 60, indicating solid, albeit cautious, momentum. Traders should monitor volatility contraction and potential breakouts, as a push above 185.20 could spark renewed momentum. Conversely, a pullback below 184.00 may result in range-bound consolidation in the near term.
In summary, while EUR/JPY faces external risks from potential Japanese intervention and ongoing global uncertainties, the technical structure remains supportive of continued bullish moves, positioning the cross for selective long-term and swing trading opportunities.
