EUR/JPY traded near 184.15 in early European hours on Friday. Trading volume may be thin due to the Good Friday holiday.
The Euro found support after comments from ECB policymaker Francois Villeroy de Galhau on Thursday. He said the next rate move is very likely an increase, though it is too early to say when hikes will begin.
Euro Yen Outlook
The Yen may gain support if demand for safe-haven assets rises amid Middle East tensions. A military strike destroyed a bridge near Tehran, and US President Donald Trump urged Iran to make a deal.
Iran’s foreign minister Abbas Araghchi said recent US strikes on civilian infrastructure would not force Iran to back down. He added the actions “convey the defeat and moral collapse of an enemy in disarray.”
On the daily chart, EUR/JPY remains mildly bullish above the rising 100-day EMA near 182.10. Price is consolidating under the upper Bollinger Band, while the Bollinger middle band is around 183.50.
RSI is just above 54, pointing to positive momentum. Support is at 183.50, then 182.50–182.10, with a drop opening 181.50.
Resistance is near 184.80, and a daily close above it may target 186.00. The technical section was produced with help from an AI tool.
Options Volatility Strategies
The current environment presents a clear conflict between a hawkish European Central Bank and rising geopolitical risk. The EUR/JPY is holding firm above its 100-day moving average, suggesting an underlying bullish trend supported by technicals. Derivative traders should therefore prepare for potential volatility as these two opposing forces play out in the coming weeks.
The ECB’s hints at a rate hike are significant, especially with recent data showing Eurozone core inflation ticking back up towards 2.8%. This is a notable shift from the easing cycle we saw through most of 2025, giving credibility to the idea that monetary tightening could resume. We believe buying EUR/JPY call options with a strike price near 185.00 could be a viable way to position for a push towards the 186.00 resistance level.
On the other hand, the escalating situation in the Middle East could quickly strengthen the Yen, as we have seen in past conflicts which trigger a flight to safety. This safe-haven demand acts as a powerful counterweight to the Euro’s fundamental strength. The Bank of Japan’s policy rate, still hovering at just 0.10% since the historic end of negative rates back in 2024, means the interest rate difference still heavily favors the Euro for now.
Given this uncertainty, protecting against downside risk is crucial for anyone holding long positions. We see value in buying put options with a strike below the critical 182.10 support area, which would serve as an effective hedge against a sudden risk-off move. A confirmed break of this technical level would signal a significant weakening of the recent uptrend.
Implied volatility on EUR/JPY options will be a key indicator to watch in the coming sessions. With market participation thin due to the holiday, even small news items could cause exaggerated price swings. Therefore, strategies that profit from an increase in volatility, such as a long straddle, might be appropriate for those expecting a big move but who are uncertain of the direction.
