EUR/JPY Holds Gains; Technical Signals Favor Sellers

Key Moments

EUR/JPY Supported Above 177.00 Amid Intervention Concerns

EUR/JPY is trading in positive territory around 177.10 during Thursday’s early European session. Despite the modest strength, upside potential appears constrained as market participants remain wary of possible foreign exchange intervention by Japanese authorities.

Japanese Finance Minister Satsuki Katayama signaled a readiness to step in again if necessary following stronger-than-expected US inflation data. She stressed that the stance of the United States and Japan has not changed since their joint operation in July aimed at supporting the Japanese Yen (JPY).

ECB Officials Maintain Hawkish Tone; French Fiscal Risks in Focus

On the European side, policy guidance from key European Central Bank (ECB) figures continues to lean toward further tightening. On Wednesday, ECB Governing Council member Pierre Wunsch indicated that additional rate hikes are likely, stating that
“we are probably going to have to hike again”
as inflation approaches 4%. He also highlighted uncertainties related to energy developments and artificial intelligence.

Separately, ECB President Christine Lagarde commented that France should address its fiscal challenges through budgetary consolidation, dampening speculation that the central bank could move to purchase French bonds to cap yields.

French Political Landscape and Risk Premiums

Analysts at ABN Amro point to France’s political framework as a central factor shaping the country’s risk premium. They note that
“as things currently stand it appears as if Le Pen will win the race to be France’s next President.”
Referencing the baseline view of Rabo’s economists, they flag that a Le Pen administration would probably involve
“a fractious relationship with the EU regarding policymaking”
while she is still expected
“to maintain her existing position of neither wanting to disband the EU entirely nor pursue an Euro exit.”

ABN Amro also emphasizes the entrenched nature of political fragmentation in France. In their assessment,
“it seems likely that no political grouping will emerge with an absolute majority if elections are held in H1 2027.”
They argue that such an outcome would prolong the current environment of
“low government stability/ ability to pass a budget/ policy coherence/ reform capacity,”
which they describe as
“clearly a concern because, in a situation of unchanged government policy, France’s budget deficit is set to significantly deteriorate over the upcoming two years.”

Technical Picture: Bearish Bias Intact Beneath the 100-Day SMA

From a technical standpoint, EUR/JPY continues to trade under clear downside pressure on the daily chart. The pair remains below both the 20-period Bollinger simple moving average and the 100-day simple moving average, keeping price action contained in the lower half of the recent volatility band. The 14-day Relative Strength Index (RSI) prints at 37.56, recovering from oversold conditions but still capped beneath the 50 mark, which moderates but does not negate the bearish inclination.

On the downside, the lower Bollinger band at 175.65 is identified as the next important support area. A daily close below this threshold would reopen the move toward the October 20 low, 2025 at 175.34, followed by the October 2, 2025 trough at 172.27.

On the upside, initial resistance appears at the Bollinger middle band at 178.35, preceding the 180.00 psychological barrier. A sustained break above 180.00 could expose the upper Bollinger boundary at 181.00, with the 100-day simple moving average at 183.00 acting as a subsequent key resistance zone.