EUR/JPY Holds Near Key Support as Traders Weigh BoJ Outlook

Key Moments

Technical Setup: EUR/JPY Near Channel Support

EUR/JPY is trading slightly lower around 185.50 during Asian hours on Tuesday after posting gains in the previous session. On the daily chart, the cross is hovering close to the lower boundary of an ascending channel, a level that is described as a critical technical area. This zone is viewed as offering a potentially favorable risk-reward entry point, but persistent price pressure against this support without a swift rebound would point to emerging weakness in the underlying trend.

From a trend perspective, EUR/JPY maintains a bullish bias as it continues to trade above both the nine-period and 50-period Exponential Moving Averages (EMAs). The shorter-term EMA is positioned above the longer-term EMA, reinforcing the idea of an ongoing uptrend. Meanwhile, the 14-day Relative Strength Index (RSI) is around 55.9, remaining in positive territory and below overbought thresholds, which suggests scope for additional gains as long as nearby moving average support levels remain intact.

Upside Targets and Resistance Levels

If the bullish structure holds, EUR/JPY may extend higher toward the all-time peak of 187.95, which was reached on April 17. A further move beyond that level would bring the upper boundary of the ascending channel, located around 189.30, into focus as the next potential resistance area.

Key Support Zones and Bearish Risk

On the downside, the cross is currently testing immediate support at the nine-day EMA around 185.40. Just below, the lower boundary of the ascending channel is situated near 185.30, providing an additional support layer. If selling pressure intensifies, the next important level is the 50-day EMA at 184.86.

A decisive break beneath this medium-term EMA would signal a potential bearish reversal and could increase downward pressure on EUR/JPY. In that scenario, the pair may move toward the region around the nine-month low of 179.37, which was recorded on August 3.

BoJ Policy Expectations and Yen Market Focus

Yen-related markets are drawing heightened attention as investors look ahead to the Bank of Japan’s September 18 policy decision. Strategists at Scotiabank state that the “outlook for relative central bank policy remains front and center into the BoJ’s September 18 decision,” with market participants closely watching signals from both domestic officials and international counterparts.

Scotiabank highlights media reports that US Secretary Bessent expects Gov. Ueda “to do the right thing,” which reflects ongoing market expectations for a carefully calibrated policy response. The strategists also note that Board member Takata is due to speak later this week, a development that could further influence perceptions of the BoJ’s near-term policy path.