EUR/JPY Price Forecast: Slips below 179.00 as bearish bias prevails
- EUR/JPY may navigate the region around the lower boundary of the descending channel at 176.90.
- The 14-day Relative Strength Index is at 35.96, showing dominant selling pressure.
- The immediate barrier lies at the nine-day EMA at 179.55.
EUR/JPY remains subdued for the third successive day, trading around 178.80 during Asian hours on Tuesday. 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 keeping a bearish near-term tone as spot holds beneath both the nine- and 50-period Exponential Moving Averages (EMAs). The alignment of short- and medium-term EMAs above price suggests upside remains capped for now, while the 14-day Relative Strength Index (RSI) at 35.96 hovers just above oversold territory, hinting that selling pressure is still dominant but may be losing some intensity.
The EUR/JPY cross may fall toward the lower boundary of the descending channel at 176.90, followed by an 11-month low of 175.70, recorded in November 2025.
On the upside, the EUR/JPY cross may test the nine-day EMA at 179.55. A break above the short-term price average could trigger a bullish reversal and support the cross as it tests the 50-day EMA at 182.01. Further resistance lies at the upper boundary of the descending channel around 184.50, followed by the all-time high of 187.95 set on April 17.
Yen positioning pares back as JPY net longs are cut sharply
Analysts at Rabobank highlight a notable shift in speculative positioning, observing that "JPY net longs have decreased from 120 thousand positions to around 72 thousand." This sharp reduction in net long exposure underscores a meaningful loss of conviction among investors toward the Yen, even as policy developments in Japan remain in focus.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
What key factors drive the Japanese Yen?
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.
How do the decisions of the Bank of Japan impact the Japanese Yen?
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.
How does the differential between Japanese and US bond yields impact the Japanese 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.
How does broader risk sentiment impact the Japanese Yen?
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.