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EUR/JPY Price Forecast: Trades above nine-day EMA near 176.50
- At 176.33, the nine-day EMA provides immediate support that EUR/JPY may test.
- A reading of 42.64 on the 14-day Relative Strength Index points to limited upward momentum.
- Near 178.00, the upper edge of the descending channel presents the main resistance.
At around 176.40 in Monday’s Asian session, EUR/JPY is edging higher after recouping losses from the previous trading day. Despite the recovery, the descending channel on the daily chart signals a distinctly bearish outlook for the cross.
Trading below the 50-day Exponential Moving Average (EMA), EUR/JPY retains a bearish short-term outlook. Its position just above the nine-day EMA suggests only a tentative stabilisation. Meanwhile, the 14-day Relative Strength Index (RSI) stands at 42.64, below the neutral 50 threshold, pointing to muted upward momentum rather than a convincing recovery.
Immediate support for EUR/JPY comes at the nine-day EMA, at 176.33, which the cross may test before the 12-month low of 175.07 recorded on 30 October. Below that, the descending channel’s lower edge offers further support around 174.40. Should the cross break beneath the channel, the area around the 15-month low of 169.72 would come into view.
A move higher could take EUR/JPY towards the descending channel’s upper edge near 178.00, with the 50-day EMA at 178.79 the next level to watch. Clearing this medium-term moving average would trigger a bullish reversal, supporting a move towards the area around the all-time high of 187.95 set on 17 April.
Dollar remains under pressure as tech sell-off meets hawkish Fed stance
The continuing technology-sector sell-off is likely to weigh on the Dollar in the short term, according to Brown Brothers Harriman’s Elias Haddad, with “the USD index (DXY) likely to test support at 101.00.” Nevertheless, Haddad emphasises that “strong US economic activity and rising price pressures reinforce the Fed’s hawkish bias, keeping rate differentials supportive of USD,” indicating that underlying economic and policy support may limit the Dollar’s losses.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro questions answered
Used by the 20 European Union countries in the Eurozone, the Euro ranks second only to the US Dollar among the world’s most traded currencies. Its share of all foreign exchange transactions stood at 31% in 2022, with average daily turnover exceeding $2.2 trillion. The world’s most actively traded currency pair, EUR/USD, represents an estimated 30% of all transactions. It is followed by EUR/JPY at 4%, EUR/GBP at 3% and EUR/AUD at 2%.
Based in Frankfurt, Germany, the European Central Bank (ECB) acts as the Eurozone’s central bank, setting interest rates and overseeing monetary policy. Maintaining price stability is its principal mandate, whether through bringing inflation under control or encouraging growth. To achieve this, the ECB mainly raises or lowers interest rates. Higher rates relative to other economies, or expectations of an increase, generally support the Euro; the reverse also applies. Monetary policy is decided by the ECB Governing Council at eight meetings each year. Those decisions are taken by the heads of the Eurozone’s national central banks alongside six permanent members, among them ECB President Christine Lagarde.
Measured using the Harmonised Index of Consumer Prices (HICP), Eurozone inflation is an important economic indicator for the Euro. An increase above expectations, particularly beyond the ECB’s 2% target, requires the central bank to raise interest rates to restore control over inflation. When interest rates are relatively high compared with those elsewhere, the Euro usually benefits, as the region becomes a more attractive destination for global investors’ funds.
By providing a measure of economic health, data releases can affect the Euro. GDP, manufacturing and services PMIs, employment figures and consumer sentiment surveys are among the indicators that can steer the single currency. Economic strength supports the Euro by drawing in more foreign investment and potentially prompting the ECB to raise interest rates, directly strengthening the currency. Weak figures, by contrast, are likely to push the Euro lower. Particular weight is attached to releases from Germany, France, Italy and Spain. Together, these four largest euro-area economies represent 75% of the Eurozone’s economy.
The trade balance is another important release for the Euro, recording the difference between a country’s export earnings and its spending on imports during a given period. Strong overseas demand for a country’s exports creates additional demand for its currency as foreign buyers seek to purchase those goods, thereby lifting its value. A positive net trade balance therefore strengthens a currency, while a negative balance has the opposite effect.
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