EUR/JPY Price Forecast: Rebound from fresh 12-month lows puts pair near 176.00

• Selling pressure pushed EUR/JPY to a new 12-month low of 175.20 on Friday.
• Downward momentum remains moderate rather than extreme, with the 14-day Relative Strength Index at 34.76.
• At 176.98, the nine-day EMA presents the first resistance hurdle.

A bearish bias continues to dominate EUR/JPY, although the cross is recovering after two days of declines and trades near 176.10 in Friday’s Asian session. The daily chart places it within a descending channel, signalling that the broader downward bias remains intact.

Trading below both the nine- and 50-period Exponential Moving Averages (EMAs), EUR/JPY continues to show a corrective bias. These layers of dynamic resistance are restricting advances and maintaining a bearish near-term outlook. Meanwhile, the 14-day Relative Strength Index (RSI) stands at 34.76, just above oversold territory, suggesting that downward momentum persists without reaching an extreme.

Friday’s trading took EUR/JPY to a 12-month low of 175.20, with the descending channel’s lower boundary offering additional support around 175.00. A break beneath this support confluence would leave scope for further losses towards the region of the 15-month low at 169.72.

Any recovery would first face the nine-day EMA at 176.98 before encountering the descending channel’s upper boundary near 178.70. Beyond that, the 50-day EMA at 179.54 provides another resistance level. Breaking above this medium-term price average would trigger a bullish reversal, helping EUR/JPY advance towards the area around its all-time high of 187.95, set on April 17.

Could AI-led inflation risks flagged by BoJ’s Himino keep the Yen on alert?

A firmly hawkish bias emerges from BoJ’s Himino’s remarks, although his FXS Speechtracker score of 8.2/10 exactly matches the historic average and reflects a consistently firm stance rather than an unexpected change. His focus on robust AI-related capital expenditure and exports, higher medium- and long-term inflation expectations, and underlying inflation approaching the 2% target contrasts clearly with financial conditions that remain accommodative and real rates that are still low.

Expectations that the Bank of Japan is moving closer to further normalisation are reinforced by the warning that delaying policy adjustments could intensify upside price risks and harm the economy. From an FX perspective, rapid bank lending, heightened inflation risks and the stated objective of achieving stable prices through appropriate monetary policy favour a gradual retreat from ultra-easy settings. This backdrop offers mild support to the Yen, provided concrete action follows.

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