EUR\/JPY extended gains for a fourth session, trading near 185.30 in Asian hours on Wednesday. The cross stayed above the nine-day and 50-day Exponential Moving Averages (EMAs), clustered just under 185.00, while the 14-day Relative Strength Index (RSI) hovered around 53, pointing to mildly positive momentum that is not yet overbought.<\/p>\n
On the daily chart, price action sat near the upper boundary of a descending channel at about 185.40. A sustained break above the channel could open a move towards the record high of 187.95, set on 17 April, whereas support is seen first at the 185.00 psychological level, alongside the nine-day EMA at 184.99 and then the 50-day EMA at 184.89. If that zone gives way, attention turns to the three-month low of 181.87 from 16 March, followed by the five-month low of 180.81 reached on 12 February.<\/p>\n
We are closely watching the EUR\/JPY cross as it challenges the key 185.40 resistance level. The pair is showing strength by staying above its key moving averages around 185.00. A sustained move above 185.40 would signal a bullish breakout from its recent downward channel, prompting a more aggressive long position.<\/p>\n
This technical strength is backed by recent fundamental data from the Eurozone. The latest Harmonised Index of Consumer Prices (HICP) for April 2026 came in at 2.7%, higher than the 2.5% forecast, which reduces the likelihood of an early European Central Bank rate cut. This divergence in monetary policy expectations is providing a strong tailwind for the Euro against the Yen.<\/p>\n
Meanwhile, the Bank of Japan is reinforcing its dovish stance, further supporting our view on EUR\/JPY. Following last week\u2019s data showing Japan\u2019s national Core CPI slowing to 1.9%, the BoJ governor stated a commitment to maintaining an accommodative policy to ensure sustainable wage growth. This has historically kept pressure on the yen and is likely to continue doing so.<\/p>\n
Given this setup, we believe buying out-of-the-money call options with a strike price near 186.00 and a July 2026 expiration is a prudent strategy. This allows us to participate in a potential rally towards the April high of 187.95. The limited premium paid for the options defines our maximum risk should the breakout fail to materialize.<\/p>\n
However, we must manage our risk if the price is rejected at the channel’s upper boundary and falls below 185.00. Such a move would invalidate the bullish thesis and could trigger a slide towards the March low of 181.87. In that scenario, we would look to exit any long positions and consider purchasing puts to trade the downward momentum.<\/p>\n","protected":false},"excerpt":{"rendered":"
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