The EUR/JPY cross is experiencing a decline for the fourth consecutive day, currently trading around 162.25 during the early European session. The recent surge in the Japanese Yen (JPY) against the Euro (EUR) can be attributed to a surprising hawkish policy announcement by the Bank of Japan (BoJ) on Wednesday.
The BoJ’s decision to increase its short-term policy rate to 0.25% from 0-0.1% marks the largest change since 2008. Furthermore, the central bank revealed its plans to taper Japanese government bonds to around 3 trillion yen ($19.64 billion) per month in the first quarter of 2026.
Technical analysis indicates that the EUR/JPY cross remains bearish, staying below the critical 100-period Exponential Moving Average (EMA). The Relative Strength Index (RSI) also indicates a bearish trend below the midline, although the oversold condition suggests a potential consolidation before further depreciation.
Key support levels for the cross are identified at the psychological mark of 162.00, with potential downside targets at 161.00-161.10 and 160.22. On the upside, resistance levels are observed at 164.85, 167.88, and potentially higher towards 168.55 and 169.12.
EUR/JPY 4-hour chart
Japanese Yen FAQs
The Japanese Yen (JPY) is influenced by various factors, including the performance of the Japanese economy, Bank of Japan policies, yield differentials, and risk sentiment among traders. The BoJ plays a crucial role in currency control, and its ultra-loose monetary policy has led to a widening policy gap with other central banks, particularly the US Federal Reserve.
Investors often view the Japanese Yen as a safe-haven asset, preferring it during times of market turmoil due to its perceived stability. The Yen’s value can strengthen in turbulent times compared to riskier currencies.
Expert Analysis and Conclusion
The current EUR/JPY downtrend is driven by the BoJ’s hawkish policy stance and the Yen’s safe-haven appeal. Investors should monitor key support and resistance levels to gauge potential trading opportunities. The widening policy gap between the BoJ and other central banks could continue to impact the currency pair’s movement in the near term. It is essential to stay informed about central bank policies and global economic developments to make informed investment decisions.