The EUR/JPY cross trades in negative territory around 181.20 during the early European trading hours on Monday. The Japanese Yen (JPY) strengthens against the Euro (EUR) as Japanese official projected a Bank of Japan (BoJ) rate hike this month.
Japanese Prime Minister Sanae Takaichi’s economic adviser, Takuji Aida, said on Monday that the BoJ is expected to raise interest rates in September and keep hiking at a pace of once every quarter until January next year.
“After the September rate hike, the BOJ will likely follow up with another increase by January next year,” said Aida. “After that, the BOJ will revert to a hike of around once every six months,” Aida added.
Traders brace for the European Central Bank (ECB) interest rate decision on Thursday. The ECB is likely to raise interest rates at its upcoming policy meeting, which would bring its deposit rate by a quarter-point to 2.50%, according to a Reuters poll published on Thursday.
Japan data calendar in focus as Deutsche Bank tracks wages and prices
According to Deutsche Bank, the Japan data calendar is set to be busy next week, with attention on a series of releases that will help gauge domestic momentum. The bank highlights that “in Japan, Tuesday’s releases include July labour cash earnings (Tuesday) as well as August Economy Watchers survey (Tuesday) and the PPI (Friday),” underscoring the focus on both household income dynamics and upstream price pressures as investors assess the evolving macro backdrop.
Technical Analysis: EUR/JPY keeps a bearish vibe, with emerging oversold RSI momentum
In the daily chart, EUR/JPY holds in a clear bearish near-term bias as price sits below the 20-day Bollinger middle band and the 100-day moving average, keeping the broader structure capped after the recent slide. The Relative Strength Index (14) hovers just above the 30 area, hinting at emerging oversold conditions but not yet signaling a decisive loss of downside momentum.
On the topside, initial resistance aligns with the lower Bollinger band near 181.40, a level now acting as immediate overhead supply after being breached. The next hurdle to watch is the August 10 low of 182.70, en route to the 20-day simple moving average around 184.45 and the 100-day moving average at 184.90 forming a dense resistance zone above.
On the downside, the September 4 low of 180.23 acts as an initial support level for the cross. The next contention level is located at the 180.00 psychological level. Any follow-through selling below this level could expose the August 3 low of 179.37.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
