The EUR/JPY currency pair is trading positively around 184.85 during the early European session on Tuesday, supported by a hawkish stance from the European Central Bank (ECB) ahead of its June monetary policy meeting scheduled for Thursday [1]. Market participants have fully priced in a 25-basis-point rate hike by the ECB, following a surge in Eurozone inflation to 3.2% [1]. This expectation has bolstered the Euro against the Japanese Yen.
Meanwhile, markets remain vigilant for potential foreign exchange intervention by Japanese authorities, which could support the Yen and act as a headwind for the EUR/JPY cross [1]. Japanese officials have issued strong verbal warnings, emphasizing their readiness to take decisive and appropriate action to protect the domestic currency [1].
Technical analysis indicates that EUR/JPY maintains a bullish bias, with the spot price above the 100-day simple moving average (SMA) and the Bollinger band midline. The RSI at 45.9 suggests a slightly soft but neutral momentum, pointing to consolidation rather than a sharp downside move [1]. Key support levels are identified at the 100-day SMA (184.50) and the lower Bollinger band (184.20), while resistance is seen at the Bollinger band midline (185.12) and the upper boundary (185.12), with further upside potential toward the 186.00 psychological level if buying persists [1].
The article also notes that the Japanese Yen's value is influenced by the Bank of Japan's policy, bond yield differentials, and risk sentiment. The Bank of Japan's gradual unwinding of its ultra-loose monetary policy has recently provided some support to the Yen [1].
CONCLUSION
EUR/JPY is trading with a bullish tone above 184.50, driven by expectations of an ECB rate hike and elevated Eurozone inflation. However, intervention risks from Japanese authorities and technical support levels may limit further upside. Market participants are closely watching both central bank actions and intervention signals for future direction.