EUR/JPY Drops as Intervention Jitters and BoJ Lift Yen

Key Moments

EUR/JPY traded around 175.65 in early European hours on Wednesday, staying in negative territory below its 100-day moving average.
Japanese officials reiterated readiness for decisive FX action, while markets looked ahead to ECB and BoJ policy decisions later in the week.
Technical signals showed EUR/JPY near lower Bollinger Band support at 175.45, with the RSI at 32.67, pointing to a stretched but intact downside bias.

Euro-Yen Under Pressure as Yen Strengthens

EUR/JPY weakened to roughly 175.65 during early European trading on Wednesday, extending its decline and maintaining a negative tone beneath the 100-day Simple Moving Average (SMA). Bearish momentum in the Relative Strength Index (RSI) reinforced the downside bias as the Japanese Yen (JPY) firmed against the Euro (EUR) on mounting concerns over potential currency-market intervention by Japanese authorities.

The immediate support level for the pair is identified at 175.45, while the first notable resistance on the upside is seen at 176.43.

Japanese Officials Reaffirm Intervention Readiness

Japanese Finance Minister Satsuki Katayama stated on Tuesday that the government is prepared to take decisive steps in the foreign-exchange market if needed. Katayama also indicated that authorities will continue to observe market developments with “heightened urgency, including at this moment.”

These comments have contributed to a firmer Yen tone as markets weigh the risk that authorities could act if volatility or depreciation in JPY were to intensify.

Policy Meetings in Focus: ECB and BoJ

Market participants are awaiting the European Central Bank (ECB) interest rate announcement on Thursday, seeking fresh direction for the Euro. Attention will then turn to the Bank of Japan (BoJ) policy decision on Friday.

The ECB had previously increased its three key policy rates by 25 basis points in September. The upcoming decision on Thursday is widely expected to result in unchanged rates, although expectations remain elevated for additional tightening in subsequent meetings, with higher oil prices and persistent inflation risks keeping pressure on policymakers.

The BoJ, for its part, is anticipated to leave its policy rate at 1.25% at the conclusion of its two-day meeting on Friday. According to Reuters reports referenced in the article, the central bank is also expected to state that its “underlying inflation” target of 2% has been achieved, which could carry implications for the pace and extent of future policy normalization.

Analyst Views: Intervention Risk Still Seen at a Distance

Commentary from analysts at MUFG/BTMU suggests that while the possibility of official FX action remains on the table, it is not seen as imminent. They remark that
“we are likely still some distance from that with the 160-level the obvious point in which those threats could turn into action.”
They further note that
“the yen may well struggle through this week with investors likely anticipating BoJ Governor Ueda being more cautious in his words on Friday given the global backdrop.”

MUFG/BTMU analysts also expect the BoJ to recognize the need for additional tightening, but they caution that market expectations may not be fully met. As they put it,
“the BoJ will be mindful of that and while we expect the BoJ to signal more rate hikes are necessary, Ueda’s style of communication suggests he may not provide a strong message on a move in December that remains 80% priced.”

BoJ’s Himino Highlights Inflation Risks and AI-Driven Investment

Comments attributed to BoJ’s Himino, evaluated via the FXS Speechtracker, show a score of 8.2, matching the speaker’s historical average. However, the focus on rising underlying inflation and higher inflation expectations indicates a hawkish leaning. References to strong capital expenditure tied to artificial intelligence, firm export activity, accommodative financial conditions, and fast-growing bank lending underline that real interest rates are still low and that upside inflation risks are gaining prominence.

The signal that delaying policy adjustments could elevate inflation risks and harm the broader economy points to a growing willingness to tighten policy in pursuit of stable prices. From an FX perspective, the combination of underlying inflation near target and heightened upside risks supports expectations for continued normalization, which is viewed as constructive for the Yen, particularly against lower-yielding currencies.

Technical Picture: EUR/JPY Holds Bearish Bias Below 100-Day Average

On the daily chart, EUR/JPY retains a short-term bearish stance, with spot prices trading well beneath the 100-day Moving Average and below the 20-day simple moving average of the Bollinger Bands. The pair is hovering just above the lower Bollinger Band, while the 14-day RSI at 32.67 is close to oversold territory. This combination points to persistent downward pressure, even as the recent decline appears stretched.

Technical Level	Type	Comment
175.45	Support	Lower Bollinger Band and first key downside level
175.10	Support	October 23 low, exposed if 175.45 breaks
174.74	Support	October 6, 2025 low, next level below 175.10
176.43	Resistance	October 26 high, initial upside barrier
177.00	Resistance	Approximate middle Bollinger Band area
178.50	Resistance	Upper Bollinger Band, key cap before psychological 180.00
180.00	Resistance	Psychological level, above upper band
182.20	Resistance	100-day Moving Average

On the downside, a decisive move below the lower Bollinger Band at 175.45 would open the way for a test of the October 23 trough at 175.10, with further weakness then targeting the October 6, 2025 low at 174.74.

On the topside, initial resistance is located at the October 26 peak of 176.43. A recovery above that area would bring the Bollinger middle band near 177.00 into view, followed by the upper Bollinger boundary around 178.50. Sustained buying beyond 178.50 could clear the path toward the psychological 180.00 mark and ultimately the 100-day Moving Average at 182.20.