EUR\/JPY rose after falling by nearly 0.5% in the previous session, trading near 186.80 during Asian hours on Monday. The daily chart shows price action moving higher inside an ascending channel.<\/p>\n
The cross remains above the nine- and 50-period Exponential Moving Averages (EMAs), which supports the near-term upward trend. The 14-day Relative Strength Index is 62.30, showing positive momentum without reaching extreme levels.<\/p>\n
Immediate resistance is seen at 187.00, followed by the all-time high of 187.95 set on 17 April. If the move extends, the pair could test the upper channel boundary near 188.60.<\/p>\n
On the downside, first support is the nine-day EMA at 186.58, then the lower channel boundary around 186.00. If price breaks below the channel, it may move towards the 50-day EMA at 184.51.<\/p>\n
We see the bullish technical trend in EUR\/JPY is fundamentally supported by monetary policy divergence. The current interest rate differential, with the European Central Bank’s policy rate at 3.5% versus the Bank of Japan’s 0.1%, continues to make holding the Euro more attractive. This policy gap is the primary driver behind the sustained uptrend.<\/p>\n
Given the room for upside indicated by the RSI, we are looking at buying call options with strikes near the 188.00 level. This strategy aims to capitalize on a potential move towards the recent all-time high and the upper channel boundary. The latest Eurozone inflation report, showing a steady 2.4%, suggests the ECB will not rush to cut rates, which further strengthens our conviction.<\/p>\n
For risk management, the nine-day EMA at 186.58 is our first line of defense. We remember the sharp pullback on intervention fears back in the third quarter of 2025, so a confirmed break below the 186.00 channel support would prompt us to reduce long exposure. Cautious traders might consider buying protective puts below this level to hedge against a similar sudden downturn.<\/p>\n
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