EUR/JPY Price Forecast: Bearish bias holds below the 100-day SMA as pair slips under 178.00

• Selling pressure takes EUR/JPY towards 177.90 as European trading gets under way on Thursday.
• Below the 100-day SMA, the bias stays bearish, although a neutral RSI leaves scope for further consolidation.
• While 176.90 offers immediate support, the first resistance level stands at 178.45.

Yen strength keeps EUR/JPY on the back foot near 177.90 in early European trading on Thursday. The Japanese Yen (JPY) gains against the Euro (EUR) as minutes from the Bank of Japan's (BoJ) September meeting bolster expectations of additional interest rate increases.

Released on Thursday, the September meeting minutes showed that most BoJ policymakers considered further rate hikes appropriate as underlying inflation moved towards the central bank's 2% target.

There may be scope to quicken the pace of rate increases, one board member suggested, as the central bank evaluated the impact of developments in the Middle East, rising demand associated with Artificial Intelligence (AI), and Foreign Exchange (FX) movements.

A hawkish European Central Bank (ECB), however, could cushion the EUR's decline. Speaking on Tuesday, ECB Governing Council member Joachim Nagel said a deteriorating inflation outlook would probably prompt the central bank to raise borrowing costs next month. While economists anticipate that next month's rate move will be the last, markets expect tightening to extend into 2027.

Can the ECB contain rising inflation as weaker growth raises Eurozone stagflation risks?

The latest Eurostat figures point to euro area headline inflation “rising to 4.0% y/y in October, above our expectation of 3.8%,” according to Standard Chartered analysts. They say this “signals upside risks to the European Central Bank’s (ECB’s) September projection of 3.6% average inflation in Q4.” Turning to economic activity, the analysts observe that, “stripping Ireland out, euro area GDP growth was a more modest 0.2%, and, crucially, growth momentum has been falling steadily since Q4-2025.”

For Standard Chartered, the “combination of weakening growth momentum (using euro area ex Ireland data) and still-rising inflation creates a growing policy dilemma for the ECB,” as “inflation dynamics (and the risk of second-round effects)” are likely to take precedence for now, “underpinning our expectation of another 25bps hike at the December meeting.” The bank emphasises that “stagflation is not our base case; we expect growth to remain positive and inflation to begin falling early next year,” but warns that “the direction of travel is that way, and the forces that could produce stagflation in coming quarters are apparent: higher energy prices that are squeezing real income and weighing on corporate profit margins; ECB monetary tightening operating with lagged effects on household and corporate borrowing costs; and tighter financial conditions weighing on broader activity.”

Will mounting inflation risks prompt the December rate hike Nagel signals?

A December rate increase was described as “very likely to be necessary” as ECB's Nagel struck a more hawkish tone than usual. His FXS Speechtracker score came in at 8.2, against a historical 7.0. By stressing that inflationary pressures exceeded expectations and were close to an adverse scenario, he signalled a pronounced tightening bias, lending further support to the Euro through interest rate expectations.

Readiness for further action is evident in Nagel's insistence that a surge in energy prices must not feed into broad-based inflation. At the same time, France's fiscal difficulties are presented as matters beyond the remit of monetary policy. Confidence that budgetary issues will be addressed, alongside firm warnings on inflation, keeps price stability at the centre of attention and gives Euro traders grounds for a hawkish reading.

Technical Analysis: Can EUR/JPY shake off its bearish bias below the 100-day SMA?

Despite its recent bounce from the lower Bollinger Band, EUR/JPY retains a bearish broader bias on the daily chart as the cross trades below the 100-day Simple Moving Average (SMA) in a corrective phase. A recovery above the 20-day Bollinger SMA support points to some short-term stabilisation. Meanwhile, the Relative Strength Index (RSI) has moved into neutral-to-positive territory at 53.4, indicating that downward momentum has eased without yet overturning the broader constraint from the higher moving averages.

The mid-band at 176.90 provides the nearest downside support, ahead of the 2 November low at 175.70. If that level gives way, the lower Bollinger Band boundary around 175.30 could come into view. 

Near 178.45, the upper Bollinger Band marks the first resistance hurdle, with sellers potentially returning at that level. A decisive move above it would open the path towards the psychological 180.00 mark, followed by the more significant resistance at the 100-day SMA of 181.70.

(The technical analysis of this story was written with the help of an AI tool. Know more.)