EUR/JPY rose to about 182.90 in early European trading on Thursday. The move came as markets priced the ECB keeping its benchmark rate at 2.0% through this year, with possible rises next year.
Japan’s National CPI is due on Friday. Annual inflation eased to 2.1% in December 2025, the lowest since March 2022, and a firmer reading could increase expectations of an earlier BoJ rate rise.
Technical Outlook On The Daily Chart
On the daily chart, EUR/JPY remains above the rising 100-day EMA, keeping the medium-term trend positive. The RSI is 47.83 and would point to stronger momentum if it moves above 50.
Bollinger Bands are narrowing, suggesting lower volatility, with price below the midline but above the lower band. Resistance is at 183.35 and support is at 180.75; a close above 183.35 could target 186.00, while a break below 180.75 may expose 180.68.
The Yen is influenced by Japan’s economic performance, BoJ policy, yield spreads versus US bonds, and risk sentiment. BoJ market intervention has been used at times, and ultra-loose policy from 2013 to 2024 weakened the Yen, while gradual policy unwinding since 2024 has provided some support.
Given the current price of EUR/JPY around 182.90, our immediate focus is on the divergence between central bank expectations. We see the market pricing in a steady European Central Bank rate of 2.0% for the year, which supports the Euro. This view was reinforced last week when Eurozone HICP inflation for January came in at a slightly sticky 2.4%, tempering any expectations for early rate cuts.
The main event risk is Japan’s National CPI report, which is due tomorrow. After seeing inflation cool to a low of 2.1% in December 2025, market consensus is for a slight rebound to 2.2% for January. A significantly higher reading would likely fuel speculation that the Bank of Japan will accelerate its policy normalization, strengthening the Yen and pushing this pair down.
Options Strategy Considerations
For a bullish play, we should consider buying call options with a strike price above the 183.35 resistance level, perhaps at 183.50 or 184.00. If the Japanese CPI data comes in weak and the price breaks this initial barrier, these options would offer leveraged exposure to a potential move towards the 186.00 upper target. The current low volatility, indicated by the narrowing Bollinger Bands, makes buying these options relatively inexpensive right now.
Conversely, to protect against or profit from a surprise upside in Japanese inflation, we should look at buying put options. A break below the key 100-day EMA at 180.75 would be our trigger, so puts with a strike around 180.50 could be effective. We remember the sharp JPY rallies we saw during 2024 and 2025 whenever the BoJ merely hinted at tightening, so being prepared for a downside move is crucial.
Given the potential for a significant price swing after tomorrow’s data release, a volatility strategy could be appropriate. We could establish a long straddle by buying both a call and a put option with the same strike price and expiration. This position would profit from a large move in either direction and is well-suited for the current environment of low volatility ahead of a major catalyst.
