EUR/JPY Rebounds From 180.00 Lows With ECB Hold Bets Lending Support

Summary:

EUR/JPY edges higher as traders await Eurozone inflation data, supported by expectations of an ECB policy hold and a softer Yen.

Buy EURJPY

EXP

Trading

181.250

ENTRY

183.050

TGT

179.300

181.228 +0.764 +0.42%

Point

Flat

179.300

CLOSING

181.250

ENTRY

183.050

TGT

The EUR/JPY cross regained its footing in early Tuesday trade, finding modest relief after three consecutive sessions of losses as investors cautiously reposition ahead of crucial Eurozone inflation data. The pair, which briefly slipped toward the psychologically important 180.00 handle—its lowest level in four days—rebounded during the Asian session and traded near 180.70, up just over 0.10%. While the recovery is still tentative, the stabilization signals that traders may be preparing for a potentially more decisive reaction once the latest inflation figures hit the tape.

At the macro level, the flash estimate for the Eurozone Harmonized Index of Consumer Prices (HICP) is expected to show a mild re-acceleration, with headline inflation forecast at 2.1% year-on-year in November and core inflation ticking up to 2.5% from 2.4%. Monday’s country-level releases offered a mixed picture: France, Spain, and Italy showed continued signs of disinflation, suggesting that price pressures may be settling. However, Germany—traditionally a bellwether for the bloc—posted hotter-than-anticipated readings.

The divergence complicates the policy landscape but reinforces market expectations that the European Central Bank will maintain its current stance for now. Any suggestion that the ECB is done tightening, combined with improved inflation dynamics, tends to support the Euro. For EUR/JPY, this aligns with the current mild upside bias, as investors see more stability in the Eurozone’s policy outlook compared with Japan’s evolving stance.

On the other side of the equation, the Japanese Yen continues to struggle as broader risk appetite picks up, reducing demand for safe-haven assets. However, the currency’s weakness remains measured, largely due to the market’s conviction that the Bank of Japan is slowly but surely walking toward policy normalization. BOJ Governor Kazuo Ueda reinforced that perception on Monday, noting that the probability of the Bank’s economic and price projections being realized is rising—a remark interpreted as a subtle nod toward future tightening steps.

Adding to the Yen-supportive backdrop, Japan’s Finance Minister Satsuki Katayama issued fresh warnings over recent currency volatility, stressing that the rapid depreciation of the JPY is inconsistent with underlying fundamentals. The comments revived speculation that Tokyo stands ready to intervene again should the Yen weaken too aggressively, effectively erecting a psychological ceiling for EUR/JPY bulls. Policymakers’ repeated signals act as a brake for traders who may otherwise push the pair decisively higher.

Still, the market appears content to buy the Euro cautiously on dips, especially as the Yen lacks a strong catalyst to resume broad strengthening. With inflation data on deck and the ECB’s path seemingly steadier than the BOJ’s, EUR/JPY remains caught between competing forces—policy divergence that favors the Euro and intervention risks that underpin the Yen.

Technical Analysis

While EUR/JPY has not yet escaped its broader consolidation phase, technical indicators suggest that the cross may be gearing up for another bullish attempt. The pair continues to hold comfortably above the critical support area at 179.40, and recent price action shows efforts to establish additional support around 180.25—a zone that traders are closely monitoring as a springboard for near-term gains.

A sustained push above 181.15 would further reinforce bullish momentum, but the more decisive trigger lies at the barrier near 181.75. A clean break above this level would open the path toward the next resistance at 182.30, with the broader bullish target sitting at 183.05.

Stochastic oscillators are hovering near the 80 level, a region that often precedes renewed upside traction. If momentum continues to build, the technical setup favors buyers, aligning with the broader narrative of Euro resilience against a steady—but not aggressively strengthening—Yen.

For today, the expected trading range is projected between 180.35 and 182.30, with the bias leaning decisively bullish as long as the cross holds above its emerging support zones.

TRADE RECOMMENDATION

BUY EURJPY

ENTRY PRICE: 181.25

STOP LOSS: 179.30

TAKE PROFIT: 183.05

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

1900

Win Rate

63.58%

P/L Ratio

0.72

Focus on

XAUUSD, GBPUSD, EURUSD

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