EUR/JPY snapped a four-day slide and traded around 179.20 in Asian hours on Thursday, after rebounding above 179.00, while remaining confined to a descending channel on the daily chart. The cross kept a bearish near-term bias, holding below the nine-day and 50-day Exponential Moving Averages (EMAs), and the 14-day Relative Strength Index (RSI) stood at 40.46, pointing to neutral-to-soft momentum rather than oversold conditions.
On the downside, the channel’s lower boundary sits at 176.80, with an 11-month low at 175.70 from November 2025 beyond that. On the upside, price was testing the nine-day EMA at 179.22; a break could open a move towards the 50-day EMA at 181.74, with further resistance near the channel top around 184.40 and the all-time high at 187.95 set on April 17. Separately, expectations for Bank of Japan tightening were framed around a gradual pace, with rate increases seen roughly once every three months and another hike flagged for the December policy meeting before year-end.
Technical and Derivative Trading View
We advise derivative traders to closely monitor the EUR/JPY pair as it continues to test the crucial nine-day Exponential Moving Average (EMA) barrier near 179.20. The currency cross remains locked within a clear descending channel, pointing to a sustained bearish trend in the coming weeks. Because the 14-day Relative Strength Index (RSI) is hovering in neutral-to-soft territory at 40.46, we see very little upward momentum to support a major breakout.
For traders holding short positions or utilizing put options, the primary downside target to watch is the channel’s lower boundary at 176.80. If selling pressure intensifies, we expect the pair to test its November 2025 low of 175.70, which serves as a major technical support floor. Historical trends show that when the Japanese Yen gains structural support, these key technical areas tend to be tested rapidly as retail carry trades unwind.
On the other hand, we must prepare for the risk of an upside breakout if the pair manages a daily close above the 179.22 resistance mark. Such a move would likely push the cross toward the 50-day EMA at 181.74 and potentially the upper channel line at 184.40. To mitigate this risk, we recommend that traders use tight stop-loss orders on short positions or buy out-of-the-money call options as a cheap hedge.
Bank Of Japan Policy And Fundamental Drivers
From a fundamental perspective, the Bank of Japan’s steady tightening cycle is a powerful driver, with economists projecting interest rate hikes roughly every three months. With another rate hike widely forecasted for the upcoming December policy meeting, the shrinking yield gap between the Eurozone and Japan will likely keep the Euro capped. This gradual hawkish shift by the Japanese central bank makes bearish derivative strategies highly compelling as we move deeper into the final quarter of the year.
