The EUR/JPY currency pair traded in negative territory around 179.10 during the early European session on Friday, reflecting a bearish bias as it remains below the 100-day simple moving average (SMA) [1]. The Japanese Yen (JPY) has found support against the Euro (EUR) amid growing expectations that the Bank of Japan (BoJ) will raise its policy interest rate at the upcoming September 17-18 meeting. Analysts polled by Reuters anticipate the BoJ to hike the rate to 1.25%, a level not seen in 31 years, with further increases projected to 1.5% by the end of March next year and 1.75% in the second quarter of 2027 [1]. The central bank may signal faster tightening if inflation risks intensify, and traders are closely watching Governor Kazuo Ueda’s press conference for clues on the pace and extent of future rate hikes [1].
Strategists at Brown Brothers Harriman highlighted recent hawkish commentary from BoJ board member Kazuyuki Masu, who stated that the policy rate (currently 1.00%) should be raised further to fall within the estimated neutral range of 1.10% to 2.50% [1]. Markets have nearly fully priced in a 25 basis point BoJ rate hike to 1.25% on September 18, though a 50 basis point move remains possible given inflation is near the 2% target and Japan’s economy is running slightly above capacity [1].
Technical analysis indicates that EUR/JPY maintains a bearish outlook, trading well beneath both the 20-day Bollinger SMA and the 100-day SMA. The pair is moving along the lower half of the Bollinger envelope, with the Relative Strength Index (RSI) at 28 suggesting oversold conditions that could slow, but not reverse, the downside pressure [1]. Key resistance levels are identified at 180.00, 183.35 (20-day Bollinger SMA), and 184.55 (100-day SMA), while support is seen at the September 10 low of 178.42 and the Bollinger lower band at 177.80. A break below these levels could expose the November 5, 2025 low of 175.70 [1].
CONCLUSION
EUR/JPY is under pressure as expectations for a BoJ rate hike bolster the Yen, with markets nearly fully pricing in a 25bps increase. Technical indicators suggest continued downside risk, though oversold conditions may slow further declines. Traders are awaiting signals from BoJ leadership for clarity on the future tightening path.