• EUR/JPY holds positive ground around 177.10 in Thursday’s early European session.
• The negative tone of the cross remains intact below the 100-day, with bearish RSI momentum.
• The initial support level to watch is 175.65; the immediate resistance level emerges at 178.35.

The EUR/JPY cross trades in positive territory near 177.10 during the early European trading hours on Thursday. However, the potential upside for the cross might be limited as traders remain on high alert for currency intervention from Japanese authorities.

Japanese Finance Minister Satsuki Katayama warned that she was prepared to take action in the currency market again if needed following hotter US inflation figures. She emphasized that there has been no change in the stance of the US and Japan since their joint intervention to prop up the Japanese Yen (JPY) in July.

On Wednesday, European Central Bank (ECB) Governing Council member Pierre Wunsch stated that the central bank will likely need to raise interest rates further. Wunsch said that “we are probably going to have to hike again” due to inflation that’s approaching 4%, but noted there is uncertainty on the energy front and with AI.

ECB President Christine Lagarde said that France should solve its debt woes through fiscal consolidation, damping speculation about whether the central bank might start buying French bonds to contain yields.

France risk premia anchored by political fragmentation and Le Pen scenario

Analysts at ABN Amro frame the political backdrop as a key driver of France’s risk profile, noting that “as things currently stand it appears as if Le Pen will win the race to be France’s next President.” They highlight Rabo’s economists’ baseline that a Le Pen presidency would likely be marked by “a fractious relationship with the EU regarding policymaking” while she is still expected “to maintain her existing position of neither wanting to disband the EU entirely nor pursue an Euro exit.”

Looking beyond the presidential race, ABN Amro also underscores the structural nature of France’s political fragmentation. In their view, “it seems likely that no political grouping will emerge with an absolute majority if elections are held in H1 2027.” They argue this would simply entrench the current environment of “low government stability/ ability to pass a budget/ policy coherence/ reform capacity,” which they describe as “clearly a concern because, in a situation of unchanged government policy, France’s budget deficit is set to significantly deteriorate over the upcoming two years.”

Technical Analysis: EUR/JPY keeps a bearish vibe under the 100-day SMA

In the daily chart, EUR/JPY remains under clear bearish pressure as spot holds below the 20-period Bollinger simple moving average and the 100-day simple moving average, keeping price confined to the lower half of the recent volatility envelope. The Relative Strength Index (14) at 37.56 is recovering from oversold territory but still below the 50 line, which only mildly tempers the downside bias rather than signaling a sustainable base.

On the downside, the lower limit of Bollinger band at 175.65 offers the next notable support zone. A daily close beneath this level would reopen the path toward the October 20 low, 2025 of 175.34, followed by the October 2, 2025 low of 172.27. 

On the bright side, the first upside barrier emerges at the Bollinger middle band at 178.35, en route to the 180.00 psychological level. Any follow-through buying above this level could pave the way to

the upper boundary of Bollinger band at 181.00 and then the 100-day SMA at 183.00.