EUR/JPY Price Forecast: Retains bullish bias above 163.00
- EUR/JPY gains ground to near 163.15 in Thursday’s Asian session.
- The cross maintains constructive view above the 100-day EMA, but further consolidation cannot be ruled out with neutral RSI indicator.
- The immediate resistance level is seen at 164.24; the initial support level is located at 162.20.
The EUR/JPY cross edges higher to around 163.15 during the Asian trading hours on Thursday. The Japanese Yen (JPY) softens against the Euro (EUR) amid the expectation that the next interest rate hike by the Bank of Japan (BoJ) will not come soon.
According to a Reuters poll, most economists expect the BoJ to hold rates steady through September, with a small majority forecasting a hike by year-end. Nonetheless, persistent geopolitical risks and trade-related uncertainties might boost the safe-haven flows and help limit the JPY’s losses.
Technically, EUR/JPY keeps the bullish vibe on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). However, in the near term, further consolidation cannot be ruled out in the near term as the 14-day Relative Strength Index (RSI) hovers around the midline. This suggests neutral momentum in the near term.
The first upside target to watch for the cross is seen at 164.24, the high of June 4. Extended gains could see a rally to the upper boundary of the Bollinger Band of 164.75. Further north, the next hurdle is located at 165.21, the high of May 13.
On the other hand, the initial support level for EUR/JPY emerges at 162.20, the 100-day EMA. A breach of this level could expose 161.85, the lower limit of the Bollinger Band. The key contention level to watch is in the 161.10-161.00 zone, representing the low of May 23 and the psychological level.
EUR/JPY Daily Chart
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.
EUR/JPY daily chart