The Euro rose against the Japanese Yen on Monday after Japan released weaker GDP data. EUR/JPY traded near 181.76, up almost 0.20% on the day.
Japan’s GDP grew 0.1% quarter-on-quarter in Q4, below the 0.4% forecast, after -0.7% in the previous quarter. Annualised GDP rose 0.2% versus a 1.6% forecast, improving from -2.6% previously, while the GDP deflator eased to 3.4% YoY from 3.5%.
Bank Of Japan Policy Expectations
Attention then turned to expectations for Bank of Japan policy, as slower growth reduced the case for near-term tightening. The data added pressure to the Yen.
In technical trading, GBP/JPY fell below the 50-day SMA and the 186.50–182.50 range in place since mid-December. The 50-day SMA remains above the 100-day and 200-day SMAs and is still rising.
Support sits near the 100-day SMA at 180.83, then 178.00 and the 200-day SMA near 175.35. Resistance includes the 50-day SMA at 183.66, then 186.00–187.00, with 190.00 above.
MACD is below zero with a negative histogram and the MACD line under the Signal line. RSI is near 40, below its midline and not oversold.
Key Levels And Options Positioning
We remember that weak Japanese GDP report back in early 2025, which reinforced the Bank of Japan’s cautious stance for the entire year. That fundamental weakness was a key signal that kept the interest rate difference with other central banks wide. This has fueled a carry trade that continues to pressure the Yen.
Looking at the situation now on February 16, 2026, the EUR/JPY has climbed to around 192.50. The European Central Bank’s main rate sits at 3.5%, while the Bank of Japan has only edged its own rate to 0.1%, maintaining a significant yield advantage for the Euro. This interest rate differential remains the dominant theme, making it expensive to bet against the pair.
For the coming weeks, selling out-of-the-money puts on EUR/JPY could be a viable strategy for traders. This approach allows us to collect premium while taking a bullish-to-neutral stance on the pair. The strategy profits if the EUR/JPY stays above the strike price or continues its upward drift.
We must remain aware of the risks, as the pair is at historically high levels. A sustained break below the 190.00 psychological level could signal a shift in momentum, making it a critical area to monitor. Any surprisingly hawkish commentary from the Bank of Japan could quickly unwind these positions.
Given the long-term uptrend, volatility has been a concern, potentially inflating options premiums. Traders could consider using put credit spreads to define their risk and reduce the capital required for the position. This involves selling a higher-strike put and buying a lower-strike put to cap potential losses.
