• EUR/JPY weakens to near 179.85 in Thursday’s early European session. 
• The negative outlook for the cross remains intact below the 100-day SMA, with bearish RSI momentum. 
• The first upside barrier emerges at 180.00; the initial support level is seen at 178.48. 

The EUR/JPY cross trades in negative territory around 179.85 during the early European trading hours on Thursday. Intervention risks from Japanese authorities provide some support to the Japanese Yen (JPY) against the Euro (EUR). Germany’s IFO survey is due later on Thursday. 

Traders remain on high alert for currency intervention from Japanese officials, particularly given the recent reported rate check. “FX intervention remains a blunt tool to prop up currencies, and without a forceful monetary policy response it will be difficult for Japanese authorities to rein in the selloff in the yen,” said  Matthew Ryan, head of market strategy at Ebury Partners Ltd. 

The Bank of Japan (BoJ) decided to raise its policy rates by 25 basis points (bps) last week, as widely expected. Governor Kazuo Ueda’s remarks fell short of increasingly hawkish market expectations. Analysts believe that the JPY could face some selling pressure in the near term if markets are unconvinced that more BoJ tightening is coming. 

US-Japan alignment extends into BoJ policy and yen carry dynamics

Analysts at Rabobank highlight that the deepening strategic ties between the US and Japan are now being reflected in financial markets. They note that “Trump and Japan’s PM Takaichi met to reaffirm their close geopolitical and geoeconomic alliance,” and stress that “that now encompasses the BoJ and the Yen carry trade too.” In this context, Rabobank points out that “Japan’s big banks’ domestic loan share is seeing its first sustained post-1991 bubble burst rise,” describing this as “exactly what the White House and Takaichi want as (defence) industry investment rises.”

Technical Analysis: EUR/JPY remains capped under the 100-day SMA

In the daily chart, EUR/JPY keeps a bearish near-term bias as spot remains below the 20-period Bollinger middle band and the 100-day simple moving average (SMA). The pair is also capped by the upper Bollinger band, while the Relative Strength Index (14) around 40 suggests lingering downside pressure rather than outright oversold conditions.

On the topside, the initial resistance level emerges at the 180.00 psychological mark, en route to the Bollinger middle band at 180.70 and the 100-day SMA at 184.05. A decisive break above this level could pave the way to the upper Bollinger band near 185.50.

On the downside, the first support level is located at the September 17 low of 178.48, followed by the September 14 low of 177.45. The lower limit of Bollinger band at 175.91 offers the next meaningful contention level, with a sustained break beneath that zone likely to open the way to a deeper corrective phase.