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EUR/JPY Flatlines with neutral technical outlook as traders eye intervention risks

  • EUR/JPY holds steady near 184.75 in Thursday’s early European session. 
  • The cross keeps a neutral outlook, while RSI momentum hovers around the midline. 
  • The immediate resistance level emerges at 185.00; the initial support level to watch is 184.32. 

The EUR/JPY cross trades on a flat note around 184.75 during the early European session on Thursday. Markets remain cautious over further currency intervention after Japanese Finance Minister Satsuki Katayama stated that the official is prepared to take action at any time against excessive FX volatility. 

The stronger-than-expected Japanese Gross Domestic Product (GDP) growth for the first quarter (Q1) might support the Japanese Yen (JPY) and act as a headwind for the cross. Japan’s Q1 GDP beat forecasts, growing at an annualized rate of 2.1% against the estimated 1.7%.

On the other hand, hawkish comments from the European Central Bank (ECB) policymakers could lift the Euro (EUR) against the JPY. ECB policymaker Joachim ‌Nagel said on Tuesday that the central bank may have to act at its June meeting as the Iran energy shock proves persistent and the probability of broader inflation spreading continues to rise.

The majority of economists from the Reuters poll, around 85%, indicated that the ECB would raise its deposit rate by 25 basis points (bps) to 2.25% in June, up from just over half expecting that before the April meeting.

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY is consolidating in a sideways tone, holding above the 100-day simple moving average (SMA) while trading just under the 20-day Bollinger mid-line, which keeps the immediate bias broadly neutral after the recent pullback from the highs. The Relative Strength Index (RSI) at 47 is hovering around the midline, hinting at a lack of directional conviction rather than strong selling pressure.

On the topside, initial resistance is located at the Bollinger mid-band around 185.00, with a stronger cap emerging at the May 12 high of 185.46 if bulls regain traction. The next hurdle to watch is the upper Bollinger band near 187.15. On the downside, the 100-day SMA at 184.32 offers first support, ahead of the May 7 low of 183.50. The critical support level is seen at the lower Bollinger band around 182.88, where a sustained break would likely expose a deeper correction.

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EUR/USD Consolidates above 1.1600 as Iran risks, hawkish Fed support USD

  • EUR/USD bulls seem hesitant as geopolitical uncertainties and Fed rate hike bets underpin the USD.
  • The mixed technical setup warrants some caution before positioning for any meaningful downfall.
  • A sustained strength beyond the 50% Fibo. is needed to negate the near-term negative outlook.

The EUR/USD pair struggles to capitalize on the previous day’s bounce from the 1.1585-1.1580 region, or its lowest level since April 7, and seesaws between tepid gains/minor losses during the Asian session on Thursday. Spot prices, however, manage to hold above the 1.1600 mark as traders await further developments surrounding the Middle East crisis.

Despite renewed hopes for a de-escalation in the Iran conflict, investors remain skeptical about a US-Iran peace deal amid major disagreements over Tehran’s nuclear program and a standoff over the critical Strait of Hormuz. Furthermore, hawkish FOMC Minutes reaffirmed bets for an interest rate hike in 2026, which helps limit the US Dollar’s (USD) corrective pullback from a six-week low and acts as a headwind for the EUR/USD pair.

From a technical perspective, spot prices maintain a bearish near-term bias beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 50% Fibonacci retracement level of the March-April upswing. Adding to this, the 14-period Relative Strength Index (RSI) hovers in the low-40s, hinting at subdued upside momentum. However, the overnight resilience below the 61.8% Fibo. level warrants some caution for the EUR/USD bears.

Moreover, the Moving Average Convergence Divergence (MACD) (12, 26, close, 9) stabilizes slightly above the zero line with modest positive readings. This suggests that recent downside pressure is easing but not yet reversing the broader capped tone. Hence, any subsequent slide might continue to find support at the 61.8% Fibo. around 1.1591; a break there would expose the 78.6% level at 1.1522 ahead of the structural floor near 1.1433.

On the topside, immediate resistance emerges at the 50.0% retracement at 1.1640, followed by the 38.2% Fibo. near 1.1689, with the 200-period SMA at 1.1712 and the 23.6% retracement at 1.1749 reinforcing a dense supply zone higher up.

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

EUR/USD 4-hour chart

Chart Analysis EUR/USD

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.01%-0.80%0.14%0.08%0.31%-0.31%0.03%
EUR0.01%-0.81%0.22%0.08%0.30%-0.24%0.01%
GBP0.80%0.81%0.98%0.89%1.12%0.57%0.81%
JPY-0.14%-0.22%-0.98%-0.12%0.09%-0.51%-0.16%
CAD-0.08%-0.08%-0.89%0.12%0.23%-0.39%-0.10%
AUD-0.31%-0.30%-1.12%-0.09%-0.23%-0.54%-0.20%
NZD0.31%0.24%-0.57%0.51%0.39%0.54%0.23%
CHF-0.03%-0.01%-0.81%0.16%0.10%0.20%-0.23%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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CHF declines as US Dollar advances on US-Iran uncertainty

  • USD/CHF rises as a hawkish Fed outlook and complex geopolitical developments supported the US Dollar.
  • Trump stated US-Iran talks are in final stages, but also warned of military action within days if Iran rejects terms.
  • Traders will likely observe the Q1 Swiss Industrial Production data later in the day.

USD/CHF edges higher after registering modest losses in the previous day, trading around 0.7870 during the Asian hours on Thursday. The pair appreciated as the US Dollar (USD) maintains its footing, driven by a complex mix of geopolitical developments and hawkish monetary policy signals.

Traders are currently weighing the economic implications of tense United States (US)-Iran peace negotiations against renewed threats to the critical Strait of Hormuz shipping lane. Optimism initially surfaced following a Bloomberg report on Wednesday, which quoted US President Donald Trump stating that negotiations with Iran were in their final stages. This raised market expectations that the strategically vital Strait of Hormuz could soon reopen.

Adding to the market’s caution, the geopolitical outlook turned volatile again as President Trump pledged to resume military actions within days if Iran rejects his terms. In response, Iranian President Masoud Pezeshkian struck a defiant tone on the social media platform X, stating that Tehran has no intention of capitulating and calling any attempt to force a surrender through coercion “nothing more than an illusion.”

However, the Federal Open Market Committee (FOMC) Minutes for the April meeting were released on Wednesday, indicating a majority of Federal Reserve (Fed) officials warned that the central bank would likely need to consider raising interest rates if inflation remains persistently above their 2% target. The minutes underscored deepening concerns within the Fed regarding inflation risks driven by the ongoing geopolitical conflict.

On the Swiss side, preliminary data released on Monday showed that the domestic economy expanded by 0.5% quarter-on-quarter in the first three months of the year, accelerating from the 0.2% growth recorded in the previous period. This marked Switzerland’s strongest quarterly performance in a year, signaling a steady economic recovery. Looking ahead, market participants are shifting their focus to the first-quarter 2026 Swiss Industrial Production data due later in the day.

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USD/JPY Trades flat near 159.00 as investors seek fresh developments on Iran war

  • USD/JPY flattens around 159.00 in countdown to US-Iran deal announcement.
  • US President Trump said that Washington is in final stages over deal with Iran.
  • 10-year JGB yields remain firm due to growing Japan fiscal worries.

The USD/JPY pair trades calmly around 159.00 during the Asian trading session on Thursday. The pair turns sideways as investors await fresh developments regarding negotiations between the United States (US) and Iran, after President Donald Trump stated on Wednesday that talks are in “final stages”.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally higher to near 99.20. The DXY’s rally hit pause on Wednesday after posting a fresh six-week high at 99.47, following US President Trump expressing confidence that a deal with Iran would be finalized soon.

We’re in the final stages of Iran. We’ll see what happens. Either have a deal or we’re going to do some things that are a little bit nasty, but hopefully that won’t happen,” Trump said, Bloomberg reported.

The optimism over the US-Iran, which resulted in a sharp decline in oil prices, has also slightly diminished expectations supporting the Federal Reserve (Fed) to hike interest rates this year. According to the CME FedWatch tool, the odds of the Fed delivering at least one interest rate hike this year have cooled down to 51% from 61.3% seen on Tuesday. Still, there is a sharp turnaround from two interest rate cuts anticipated before the Middle East war started.

In Japan, the announcement of an extra budget by Prime Minister (PM) Sanae Takaichi, which aims to offset the impact of the Middle East situation has raised fiscal concerns. 10-year Japan Government Bond (JGB) yields are up 0.11% to near 2.77%, close to its multi-decade high of 2.81% posted on Tuesday.

USD/JPY technical analysis

USD/JPY trades almost flat at around 159.00 at the press time. The pair holds a modest bullish bias as it remains above the 20-day exponential moving average (EMA) at 158.37.

The Relative Strength Index (RSI) is around 55 points to neutral-to-positive momentum, hinting that buyers still have the upper hand while avoiding overbought conditions.

On the downside, immediate support is located at the 20-day EMA near 158.37, where a daily close below would weaken the constructive tone and open the door to a deeper corrective slide towards the May 14 low of 157.31. Looking up, the pair aims to revisit the April 30 high of 160.73.

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GBP trades flat as cooling UK inflation, Iran tensions cap upside

  • GBP/USD flatlines near 1.3435 in Thursday’s Asian session. 
  • The headline UK CPI slowed sharply to 2.8% YoY in April from 3.3% in March, missing the forecast.
  • Trump said negotiations with Iran are in the final stages but warned of attacks if the deal fails.

The GBP/USD pair holds steady around 1.3435 during the Asian trading hours on Thursday. However, a sharp slowdown in UK inflation and uncertainty surrounding US–Iran talks could weigh on the British Pound (GBP) against the US Dollar (USD). Traders await the preliminary readings of the Purchasing Managers’ Index (PMI) for May from the UK and the US, which are due later on Thursday. 

The UK headline Consumer Price Index (CPI) inflation eased to 2.8% over the year in April from 3.3% in March, the Office for National Statistics (ONS) showed on Wednesday. This figure came in softer than the expectation of 3.0%. Additionally, the core CPI, excluding volatile food and energy items, rose 2.5% year-over-year in April, versus 3.1% prior and below the market consensus of 2.6%. 

This UK inflation data, combined with an unexpected rise in the Unemployment Rate to 5.0%, prompted traders to scale back expectations for future Bank of England (BoE) rate hikes by December. UK rate futures pointed to around 52 basis points (bps) of BoE policy tightening by December, versus about 60 bps on Tuesday, according to Reuters. 

US President Donald Trump said on Wednesday that negotiations with Iran were in the final stages, while warning of further attacks unless Iran agrees to a deal. Meanwhile, Iranian President Masoud Pezeshkian stated that Tehran was not on the brink of giving in and threatened to retaliate for any strikes with attacks beyond the Middle East. Ongoing tensions between the US and Iran could lift the Greenback and act as a headwind for the major pair in the near term. 

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Rupee Slides as Oil and US Yields Surge

The Indian rupee hovered near 96.1 per dollar, after touching successive record lows in recent sessions, weighed down by rising US Treasury yields, surging crude oil prices, and a broader risk-off mood in global markets. Pressure on emerging-market currencies intensified as the benchmark 10-year US Treasury yield climbed to 4.6250%, while Brent crude rose nearly 2% to $111.34 per barrel amid stalled US–Iran diplomatic talks. Investor sentiment was further shaken by reports of an attack on a nuclear facility in the UAE and expectations that US President Trump could discuss military options on Iran. Traders expect the rupee to remain under pressure, with the RBI focused on curbing volatility rather than defending a specific exchange-rate level. Separately, investors assessed India’s unemployment rate rising to 5.2% in April 2026 from 5.1%, the highest since October, as elevated energy prices and disruptions in Persian Gulf shipping routes reduced purchasing power.

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CHF flatlines near multi-week low on Fed hike repricing

  • USD/CHF trades flat around 0.7870 in Monday’s early European session. 
  • Markets now see the next Fed interest rate move. 
  • Trump threatened Iran to “get moving” or there “won’t be anything left of them.”

The USD/CHF pair holds steady near 0.7870 during the early European session on Monday. The pair currently trades near the highest since April 30, bolstered by a stronger US Dollar (USD). Traders will closely monitor the developments surrounding the US-Iran conflicts. 

Hotter-than-expected US inflation reports released last week have led the market to price in potential US Federal Reserve (Fed) interest rate hikes later this year, supporting the Greenback. According to the CME FedWatch tool, financial markets are now pricing in nearly a 48.4% chance the Fed could hike rates by at least 25 basis points (bps) at its December meeting, compared with 14.3% a week ago. 

US President Donald Trump on Sunday warned Iran that the “clock is ticking” as talks to bring the war to an end have stalled. Meanwhile, Iranian media reported the US had failed to make any concrete concessions in its response to Tehran’s latest proposals to end the conflict.

A lack of compromise from Washington and signs of a prolonged conflict could lift the USD against the Swiss Franc (CHF) in the near term. RBC Capital Markets analysts noted that the USD is better shielded from global energy shocks than the CHF because the US operates as a net oil exporter. 

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GBP seems vulnerable near 1.3300 vs USD on Iran tensions, UK political turmoil

  • GBP/USD attracts sellers for the fifth consecutive day amid a combination of negative factors.
  • Rising Fed rate hike bets and renewed US-Iran tensions benefit the USD’s safe-haven status.
  • The UK political turmoil undermines the GBP and exerts additional pressure on spot prices.

The GBP/USD pair adds to last week’s heavy losses and remains under some selling pressure for the fifth consecutive day on Monday. Spot prices drop to the 1.3300 mark, or the lowest level since April 8, during the Asian session and seem vulnerable amid a broadly firmer US Dollar (USD).

Against the backdrop of rising bets for an interest rate hike by the Federal Reserve (Fed) in 2026, the risk of a further escalation of geopolitical tensions in the Middle East continues to underpin the safe-haven Greenback. In fact, US President Donald Trump warned Iran that the “clock is ticking” and that there “won’t be anything left” if action is not taken soon, adding that “time is of the essence.” Adding to this, the Times of Israel reported on Saturday that Israel and the US are actively advancing military preparations to potentially resume coordinated attacks against Iran.

Furthermore, major disagreements over Iran’s nuclear program and the Strait of Hormuz dampen hopes for a peace deal, lifting Crude Oil prices to a two-week top. This revives inflationary concerns and bolsters market expectations for a more hawkish Fed. According to the CME Group’s FedWatch Tool, traders are now pricing over a 50% chance that the US central bank will raise borrowing costs by the end of this year. The outlook, in turn, remains supportive of elevated US Treasury bond yields and further benefits the USD, which is seen weighing on the GBP/USD pair.

The British Pound (GBP), on the other hand, is pressured by domestic political uncertainty amid calls for UK Prime Minister Sir Keir Starmer to step down, following the ruling Labour Party’s hefty losses in the recent local elections. Moreover, UK Health Minister Wes Streeting’s resignation last Thursday points to a deepening crisis within the party, which, in turn, backs the case for a further near-term depreciating move for the Sterling and the GBP/USD pair.

Moving ahead, traders this week will confront the release of important UK macro releases, starting with monthly employment details on Tuesday. This will be followed by the latest consumer inflation figures on Wednesday, which will play a key role in influencing expectations about the Bank of England’s (BoE) interest rate path and provide some meaningful impetus to the GBP. The fundamental backdrop, however, seems tilted in favor of the GBP/USD bears.