Key Moments
- EUR/JPY trades around 184.75 in early European hours on Thursday, with momentum indicators signaling a neutral tone.
- Stronger-than-forecast Japanese Q1 GDP, at an annualized 2.1% versus expectations of 1.7%, may offer support to JPY.
- Traders monitor potential FX intervention by Japanese authorities and hawkish rhetoric from ECB officials ahead of a possible June rate hike.
Spot Market Overview
EUR/JPY is trading broadly unchanged near 184.75 in early European dealings on Thursday, reflecting a cautious tone among market participants. The cross is currently exhibiting a neutral technical profile, with the Relative Strength Index (RSI) fluctuating close to the midpoint and providing little indication of clear directional bias.
On the immediate technical front, nearby resistance is identified at 185.00, while the first key support level is seen at 184.32.
Policy and Macro Drivers
Investors remain alert to the possibility of direct foreign exchange intervention following comments from Japanese Finance Minister Satsuki Katayama, who reiterated that authorities stand ready to respond at any time to what they view as excessive currency volatility.
At the same time, recent macroeconomic data are providing some fundamental backing for the Japanese Yen. Japan’s Gross Domestic Product for the first quarter outperformed expectations, expanding at an annualized pace of 2.1% compared with the projected 1.7%. This stronger-than-anticipated outcome could underpin JPY and weigh on the EUR/JPY cross.
In contrast, developments on the European side may offer support to the Euro. Hawkish commentary from European Central Bank officials has drawn attention, with ECB policymaker Joachim Nagel stating on Tuesday that the central bank may need to act at its June meeting if the Iran energy shock persists and the risk of more widespread inflation continues to grow.
According to a Reuters poll, a clear majority of surveyed economists – around 85% – indicated that they expect the ECB to increase its deposit rate by 25 basis points to 2.25% in June. This represents a notable shift from just over half of respondents holding that view prior to the April policy meeting.
Technical Picture: Neutral Bias Dominates
On the daily chart, EUR/JPY is moving sideways, consolidating after a recent retreat from its highs. The pair is holding above the 100-day simple moving average (SMA) while trading just below the 20-day Bollinger mid-line. This configuration maintains a broadly neutral near-term bias, with no clear evidence of aggressive selling pressure.
The RSI reading at 47 is hovering around the midline, signaling a lack of strong directional conviction. This suggests that traders are yet to commit decisively to either a bullish or bearish stance.
Key Technical Levels
Market participants are closely tracking the following levels for potential breakout or breakdown signals:
| Type | Level | Description |
|---|---|---|
| Resistance 1 | 185.00 | 20-day Bollinger mid-band; initial upside barrier |
| Resistance 2 | 185.46 | May 12 high; stronger resistance if bullish momentum returns |
| Resistance 3 | 187.15 | Upper Bollinger band; next upside hurdle |
| Support 1 | 184.32 | 100-day SMA; initial downside support |
| Support 2 | 183.50 | May 7 low; secondary support |
| Support 3 | 182.88 | Lower Bollinger band; key level where a sustained break could signal a deeper correction |
A continued hold above the 100-day SMA at 184.32 would help preserve the neutral-to-slightly-bid tone. Conversely, a decisive move below the lower Bollinger band around 182.88 would likely open the door to a more pronounced downside phase.
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