Insights 
VT 
The EUR/JPY cross experienced slight gains, trading around 177.15 during Thursday’s early European session. The Yen weakened against the Euro due to improved risk sentiment and uncertain Bank of Japan movements, which could affect the Yen.
The technical outlook for EUR/JPY is supported by its position above the 100-day EMA, with the RSI above the midline at 55.60. Immediate resistance for EUR/JPY is at 178.23, with potential momentum leading to 178.45. Alternatively, the initial support is at 175.70, with possible declines reaching the 175.00 zone.
Japanese Yen Influencing Factors
The Japanese Yen is greatly impacted by the Bank of Japan’s policies, Japanese economic performance, bond yield differentials, and global risk sentiment. The BoJ’s ultra-loose monetary policy, in place from 2013 to 2024, weakened the Yen compared to peers. The ongoing shift from this policy has provided some support for the Yen.
When risk sentiment is low, the Yen is chosen as a safe investment. The BoJ’s decisions impact the currency, sometimes intervening to adjust the Yen’s value. The gap between Japanese and US bond yields, widened by differing monetary policies, also affects the Yen. The BoJ’s policy shift is reducing this gap.
As of November 6th, 2025, the EUR/JPY cross is holding steady above the critical 177.00 level, which we see as a key technical floor. The weakness in the yen is being driven by expectations that the new Prime Minister will push for more government spending and discourage the Bank of Japan from raising rates. This political backdrop supports a continued upward path for the currency pair in the coming weeks.
To make this view more credible, we note that Eurozone core CPI for October recently came in slightly above forecasts at 2.8%, keeping the European Central Bank on a hawkish footing. In contrast, Japan’s latest Tankan survey showed a decline in business confidence, giving the BoJ ample reason to delay any policy tightening. This growing divergence between central bank outlooks strengthens the case for a long EUR/JPY position.
Trading Strategies and Outlook
For traders expecting a move higher, buying call options with a strike price of 178.00 expiring in early December offers a way to capitalize on a potential break of the recent high at 178.23. This strategy provides direct exposure to the upside while strictly limiting the maximum loss to the premium paid for the option. It is a straightforward way to act on the bullish technical and fundamental signals.
A more risk-defined strategy would be to use a bull call spread. We could look at buying a 177.50 call and simultaneously selling a 179.00 call with the same expiration date. This structure reduces the initial cost of the trade and profits from a moderate rise toward the 179.00 psychological level.
On the other hand, we must watch the 175.70 support level very closely. A decisive break below this point would negate the positive outlook and could trigger a sharper decline. In that scenario, purchasing put options with a strike near 175.00 would become an attractive strategy to profit from a move down towards the September lows.
The interest rate difference also supports this outlook, as the spread between US 10-year bonds and Japanese government bonds has widened back to over 350 basis points. Looking back at the trends through 2024, such a wide differential has consistently put pressure on the yen. This environment makes holding long euro positions against the yen through derivatives more appealing.
