Euro Drops Below 180 JPY on ECB Cut & Yield Pressures

Key Moments

EUR/JPY Under Pressure as Yen Support Firms

EUR/JPY softened to around 179.85 during early European trading on Thursday, keeping the cross on the defensive. The pair continued to trade below the 100-day simple moving average (SMA), with momentum indicators aligned with a bearish tone. The first notable upside hurdle is located at 180.00, while immediate support is seen at 178.48.

Market participants monitored the risk of official action from Japanese authorities, which has been lending some support to the Japanese Yen (JPY) against the Euro (EUR). Germany’s IFO survey was scheduled for release later on Thursday, adding another data point for Euro watchers.

Intervention Concerns and BoJ Policy Outlook

Traders remained vigilant for potential foreign exchange intervention by Japanese policymakers, particularly in light of a recent reported rate check. As noted by Matthew Ryan, head of market strategy at Ebury Partners Ltd., “FX intervention remains a blunt tool to prop up currencies, and without a forceful monetary policy response it will be difficult for Japanese authorities to rein in the selloff in the yen.”

The Bank of Japan (BoJ) recently increased its policy rate by 25 basis points, in line with expectations. However, comments from Governor Kazuo Ueda did not meet increasingly hawkish market hopes. According to analysts, the JPY could encounter renewed selling interest if investors are not persuaded that additional BoJ tightening will follow.

US-Japan Strategic Alignment and Yen Carry Dynamics

Analysts at Rabobank emphasized that closer strategic ties between the United States and Japan are now filtering through to financial markets. They observed that “Trump and Japan’s PM Takaichi met to reaffirm their close geopolitical and geoeconomic alliance,” and underscored that “that now encompasses the BoJ and the Yen carry trade too.”

Within this framework, Rabobank highlighted that “Japan’s big banks’ domestic loan share is seeing its first sustained post-1991 bubble burst rise,” characterizing this trend as “exactly what the White House and Takaichi want as (defence) industry investment rises.”

EUR/JPY Technical Picture: Bias Remains to the Downside

On the daily chart, EUR/JPY maintained a negative short-term configuration, with spot prices holding beneath both the 20-period Bollinger middle band and the 100-day SMA. The cross was also constrained by the upper Bollinger band, while the 14-period Relative Strength Index (RSI) hovered around 40, indicating ongoing downside pressure rather than extreme oversold conditions.

On the upside, a move through the 180.00 psychological threshold would expose the Bollinger middle band at 180.70 and then the 100-day SMA at 184.05. A clear break above that moving average could allow for a test of the upper Bollinger band, located near 185.50.

On the downside, support is initially defined by the September 17 trough at 178.48, followed by the September 14 low at 177.45. The lower Bollinger band at 175.91 represents the next significant support zone, and a sustained drop beneath that region would likely suggest a more pronounced corrective phase.