Key Moments
- EUR/JPY traded around 176.70 during Asian hours on Monday, extending its decline for a seventh straight session.
- The cross is testing the lower boundary of a descending channel near 176.50, with the 14-day RSI at 27.00 indicating oversold conditions.
- On the upside, initial resistance stands at the nine-day EMA at 178.27 and the 50-day EMA at 181.34.
EUR/JPY Pressured Near Channel Support
EUR/JPY remained under sustained selling pressure during Asian trading on Monday, changing hands near 176.70 and marking a seventh consecutive day of losses. Daily chart analysis shows the pair pressing against the lower edge of its descending channel around 176.50, a technical zone that could either provide support for a corrective bounce toward the upper band of the formation, or give way to a sharper downside extension.
The current positioning at the channel floor underscores a critical juncture for the cross: a hold above this area could encourage short covering, while a decisive break beneath it would point to intensifying bearish momentum within an even steeper downtrend.
Momentum Indicators and Moving Averages Signal Bearish Bias
The 14-day Relative Strength Index stands at 27.00, flagging oversold conditions that may slow the pace of the decline. However, this reading does not yet overturn the prevailing negative technical backdrop. EUR/JPY is trading below both the nine-day and 50-day Exponential Moving Averages, reinforcing the view that downside pressure is currently dominant.
Price action beneath these EMAs highlights a clearly bearish near-term tone, with sellers retaining control as long as the cross remains capped below these dynamic resistance levels.
Downside Levels: Recent Lows and Longer-Term Supports
A clean move below the descending channel’s lower boundary near 176.50 would expose the recent 11-month low at 175.70, which was registered in November 2025. A further decline from there would bring the 14-month low at 169.72 into focus as the next notable support zone.
Potential Recovery Targets on the Upside
If EUR/JPY manages to stabilize at current levels or rebound from the channel floor, the first upside target appears at the nine-day EMA at 178.27. A stronger recovery would then look toward the 50-day EMA at 181.34.
Above that, additional resistance is seen at the upper boundary of the descending channel near 184.40. A sustained break through this line would shift attention to the all-time high at 187.95, set on April 17.
(The story was corrected on October 5 at 06:53 GMT to say in the title that the pair is testing the descending channel lower boundary, instead of the ascending channel.)
BoJ Views AI as a Structural Demand Tailwind for the Yen
BoJ flags AI as a new positive demand shock for the Yen.
BoJ’s Uchida speech scores 7.2 on FXS Speechtracker, exactly in line with Uchida’s historic average, signaling a stable tone rather than an escalation in policy urgency. The emphasis on AI as a major positive demand shock, pushing up economic activity, prices, and long-term rates via equity gains and bond issuance, tilts the message modestly hawkish for the Yen as it highlights upside risks to inflation and financial conditions.
By stressing that AI affects output gaps, financial conditions, and key “star” variables, Uchida effectively frames AI as a structural force that could justify tighter policy over time if demand-side effects dominate. The caution about correction risks if profits disappoint tempers the hawkish bias, but the commitment to closely monitor AI-driven indicators keeps the balance of risks skewed toward gradual normalization rather than renewed easing, mildly supportive of the Yen.
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