Currency Hedger Analysis: EUR/JPY is attempting to stabilise after rebounding from the lower boundary of its descending channel, with the cross trading around 178.30–178.50. Although the broader technical structure remains bearish, deeply oversold momentum suggests that downside pressure could temporarily ease if buyers defend the 177.70 support area.

The rebound comes as traders assess the outlook for the euro and Japanese yen ahead of the next Bank of Japan (BoJ) meeting, with recent comments from Japanese officials reinforcing expectations that policymakers remain sensitive to currency movements and monetary-policy independence.

EUR/JPY Remains Inside a Descending Channel

The daily chart continues to show EUR/JPY trading within a descending channel, keeping the broader near-term bias tilted to the downside.

The cross remains below both its nine-day and 50-day EMAs, reinforcing the bearish technical structure.

However, the latest rebound from the channel’s lower boundary introduces an important countertrend signal.

EUR/JPY may now attempt to recover toward the upper part of its recent trading range, but buyers need to overcome several layers of resistance before the broader bearish structure can be considered broken.

RSI Signals Deeply Oversold Conditions

Momentum indicators suggest that the recent decline may have become stretched.

The 14-day Relative Strength Index (RSI) is around 26.98, placing it below the conventional 30 oversold threshold.

An oversold RSI does not automatically signal that a market must reverse. Instead, it indicates that selling pressure has become sufficiently strong for the probability of a technical rebound to increase.

For EUR/JPY, that distinction is important.

A rebound from current levels could simply represent a correction within the existing downtrend rather than the beginning of a sustained bullish reversal.

177.70 Becomes the Critical Support Level

The lower boundary of the descending channel sits around 177.70, making this the immediate level for traders to monitor.

A sustained defence of this area would strengthen the case for a corrective recovery.

However, a decisive break below 177.70 would invalidate the immediate rebound structure and expose the cross to substantially lower levels.

The next major downside reference would be the 175.70 area, corresponding to the approximately 10-month low recorded in November 2025.

That would represent a significant deterioration in the technical structure.

180.00 Is the First Major Test for Buyers

On the upside, the first important barrier is the nine-day EMA around 180.00.

This is likely to provide the first meaningful test of whether the latest rebound has genuine momentum behind it.

A sustained move above 180.00 would improve the short-term picture and bring the 50-day EMA at 183.33 into focus.

Beyond that, resistance is located at the upper boundary of the descending channel around 185.50, followed by the 187.95 all-time high recorded on April 17.

EUR/JPY Technical Levels

Yen Strength Gains Support From Japanese Policy Signals

The fundamental backdrop is also important.

Scotiabank analysts have highlighted continued resistance from Japanese officials to attempts by the United States to influence Japan’s macroeconomic policy stance.

Recent comments from Japanese authorities have reinforced a backdrop of persistent hawkish rhetoric, particularly ahead of the next BoJ meeting.

For the yen, this matters because expectations surrounding Japanese monetary policy remain an important driver of EUR/JPY.

If markets increasingly price a more restrictive BoJ stance while expectations for European monetary policy soften, the resulting interest-rate differential could provide additional support for the yen.

That would create another headwind for EUR/JPY alongside the existing technical downtrend.

Currency Hedger View

EUR/JPY is approaching an important technical decision point.

The 26.98 RSI suggests the cross is oversold, while the rebound from the descending channel’s lower boundary indicates that sellers may be temporarily losing momentum.

But the broader structure remains bearish while EUR/JPY trades below 180.00 and the 50-day EMA.

“EUR/JPY is showing the classic tension between an oversold market and an established downtrend. The RSI near 27 increases the potential for a corrective rebound, but it does not by itself signal a trend reversal. The critical levels are 177.70 on the downside and 180.00 on the upside. A break below 177.70 would reopen the path toward 175.70, while a sustained move above 180.00 would give buyers room to target 183.33.”

— Louis Roche, Analyst at Currency Hedger

What Currency Traders Are Watching

The key factors for EUR/JPY are:

• 177.70 — descending-channel support.
• 180.00 — first major upside barrier.
• 183.33 — 50-day EMA.
• 185.50 — upper channel boundary.
• 175.70 — major downside target if support breaks.
• BoJ policy expectations.
• Japanese official commentary on the yen.
• ECB policy expectations and euro-area data.
• EUR/JPY’s reaction to oversold conditions.

The most important question is whether the current rebound develops into a meaningful recovery or simply provides sellers with a better level from which to re-enter the downtrend.

Bottom Line

EUR/JPY is trading around 178.30–178.50 after rebounding from the lower boundary of its descending channel.

The RSI at 26.98 signals deeply oversold conditions, creating scope for a short-term recovery. However, the broader technical structure remains bearish below 180.00 and the 183.33 50-day EMA.

A break below 177.70 would strengthen the bearish case and expose 175.70, while a sustained move above 180.00 would shift attention toward 183.33 and potentially 185.50.

Analysis by Louis Roche, Analyst, Currency Hedger.