Key Moments
- EUR/JPY trades near 185.20 in early European dealings on Thursday, holding above the 100-day simple moving average.
- Japan’s Q2 GDP increased 0.3% compared with a previous 0.5% reading and a 0.5% market consensus.
- Overnight index swaps indicate around an 80% probability of a Bank of Japan rate hike at the next policy meeting.
Euro-Yen Rises as Weak Japan Data Weighs on JPY
EUR/JPY is edging higher toward 185.20 during Thursday’s early European session, with the cross maintaining firm traction above the 185.00 handle. The move reflects a softer Japanese Yen (JPY) against the Euro (EUR) after Japan released weaker-than-expected Gross Domestic Product (GDP) figures.
Market participants are now turning their attention to Japan’s National Consumer Price Index (CPI) inflation numbers, scheduled for release on Friday, which could provide further direction for the currency pair.
Japan’s GDP Misses Expectations, But BoJ Hike Bets Cushion Yen
Japan’s economic expansion in the second quarter (Q2) undershot projections, with GDP rising 0.3% compared with a prior 0.5% reading. The market had also anticipated 0.5% growth.
“There were views that Japan’s economy might even slip into negative growth due to higher import prices and supply constraints driven by the aggravated Iran situation,” said Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute.
Despite the disappointing data, expectations that the Bank of Japan (BoJ) could lift interest rates as soon as September 2026 are helping to limit the downside for the JPY. According to Reuters, overnight index swaps currently imply roughly an 80% chance of a rate increase at the BoJ’s next policy meeting.
ECB Outlook: Danske Bank Expects Only One More Hike
On the European side, analysts at Danske Bank continue to project a modest path for additional tightening. They reiterate that they “continue to expect only one further 25bp rate hike from the ECB.” In their view, the justification for additional rate increases beyond that single move is likely to weaken.
Technical Picture: Uptrend Intact Above 100-Day SMA
From a technical standpoint, EUR/JPY retains a constructive short-term profile on the daily chart. The pair is trading above the 100-day simple moving average (SMA) as well as the 20-day Bollinger middle band, signaling persistent buying interest on dips.
The Relative Strength Index (14) stands around 56.75, clearly above the neutral 50 threshold, indicating ongoing positive momentum while the pair consolidates just below recent highs.
| Level | Type | Description |
|---|---|---|
| 186.32 | Resistance | June 17 high and immediate upside barrier |
| 187.50 | Resistance | Upper Bollinger Band and next bullish target |
| 185.10 | Support | 100-day SMA and first downside level |
| 184.00 | Support | 20-day Bollinger middle band |
| 182.70 | Support | August 10 low |
| 180.55 | Support | Lower Bollinger Band and potential demand area |
On the upside, the first notable resistance is located at the June 17 peak of 186.32. A break above that zone would bring the upper Bollinger Band near 187.50 into focus as the next objective for buyers.
On the downside, initial support comes in at the 100-day SMA around 185.10, followed by the Bollinger middle band near 184.00. A more pronounced decline would open the way toward the August 10 low at 182.70, and then toward the lower Bollinger Band at 180.55, an area where stronger buying interest may reemerge if the broader uptrend is put to the test.
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