178.00 breaks: EUR/JPY price forecast remains bearish below the 100-day SMA as pair declines

• Near 177.90, EUR/JPY edges lower in early European trading on Thursday.
• Below the 100-day SMA, the bias stays bearish, although a neutral RSI leaves scope for further consolidation.
• 176.90 marks immediate support, while 178.45 is the first resistance level.

EUR/JPY is lower around 177.90. In Thursday’s early European session, the Japanese Yen (JPY) gains against the Euro (EUR) as minutes from the Bank of Japan’s (BoJ) September meeting bolster expectations of additional interest rate increases.

Released on Thursday, the September minutes showed that most BoJ policymakers considered further rate rises appropriate as underlying inflation neared the central bank’s 2% target.

As the central bank weighed developments in the Middle East, rising demand associated with Artificial Intelligence (AI) and Foreign Exchange (FX) movements, one board member suggested there may be scope to quicken the pace of rate increases.

A hawkish European Central Bank (ECB), however, could cushion the EUR’s decline. Speaking on Tuesday, ECB Governing Council member Joachim Nagel said a deterioration in the inflation outlook would probably prompt the central bank to raise borrowing costs next month. Economists anticipate that next month’s rate move will be the last. Markets, by contrast, price in further tightening into 2027.

4.0% inflation heightens Eurozone stagflation risks as growth weakens

The latest Eurostat figures point to euro area headline inflation “rising to 4.0% y/y in October, above our expectation of 3.8%,” according to analysts at Standard Chartered. They say this “signals upside risks to the European Central Bank’s (ECB’s) September projection of 3.6% average inflation in Q4.” Turning to activity, the analysts observe that, “stripping Ireland out, euro area GDP growth was a more modest 0.2%, and, crucially, growth momentum has been falling steadily since Q4-2025.”

For Standard Chartered, the “combination of weakening growth momentum (using euro area ex Ireland data) and still-rising inflation creates a growing policy dilemma for the ECB,” with “inflation dynamics (and the risk of second-round effects)” expected to take precedence for now, “underpinning our expectation of another 25bps hike at the December meeting.” The bank emphasises that “stagflation is not our base case; we expect growth to remain positive and inflation to begin falling early next year,” but warns that “the direction of travel is that way, and the forces that could produce stagflation in coming quarters are apparent: higher energy prices that are squeezing real income and weighing on corporate profit margins; ECB monetary tightening operating with lagged effects on household and corporate borrowing costs; and tighter financial conditions weighing on broader activity.”

8.2 Speechtracker score: Nagel signals likely December rate rise

An FXS Speechtracker reading of 8.2, against a historic 7.0, marks a more hawkish-than-usual message from ECB’s Nagel. A December rate rise is described as “very likely to be necessary.” His focus on inflationary pressures exceeding expectations and nearing an adverse scenario points to a firm tightening bias. Rate expectations consequently provide stronger support for the Euro.

By insisting that a surge in energy prices must not spread into broad-based inflation, Nagel signals a willingness to take further action. He treats France’s fiscal problems as beyond monetary policy’s remit. Strong warnings on inflation, coupled with confidence that budget difficulties will be managed, keep price stability at the centre of attention and give Euro traders grounds for a hawkish reading.

Technical Analysis: 100-day SMA caps EUR/JPY, preserving bearish bias

Despite rebounding recently from the lower Bollinger Band, EUR/JPY is still correcting on the daily chart. Trading below the 100-day Simple Moving Average (SMA) maintains the broader bearish bias. The cross has regained support at the 20-day Bollinger SMA, pointing to some short-term stabilisation. Meanwhile, a Relative Strength Index (RSI) reading of 53.4 puts the indicator in neutral-to-positive territory. This suggests selling momentum has eased, but the resistance imposed by the higher moving averages has yet to be overcome.

The mid-band at 176.90 offers the nearest support, ahead of the 2 November low at 175.70. Below that low, the lower Bollinger Band around 175.30 could come into view. 

Near 178.45, the upper Bollinger Band forms the first resistance zone, where selling could resume. A decisive move above it would open a path towards the psychological 180.00 level, followed by the more substantial resistance of the 100-day SMA at 181.70.

(The technical analysis of this story was written with the help of an AI tool. Know more.)