EUR/JPY Price Forecast: Mildly positive momentum fails to reverse losses below 178.00

• Initial support for EUR/JPY may be tested at 177.08, the nine-day EMA.
• Momentum appears modestly positive, with the 14-day Relative Strength Index near 53.
• Near 178.50, the descending channel’s upper boundary marks the first resistance level.

EUR/JPY comes under pressure following three days of gains, with the cross trading near 177.90 in Thursday’s European session. A bearish bias continues to prevail on the daily chart, where technical analysis indicates that the cross remains within a descending channel.

With nearby moving averages containing EUR/JPY, the broader tone remains neutral for now. The cross holds above the nine-day Exponential Moving Average (EMA), while the 50-day EMA continues to cap advances and restrict further upside. Momentum appears mildly positive, as indicated by the 14-day Relative Strength Index (RSI) near 53. This suggests that buyers retain a degree of control as long as the price holds above the shorter-term EMA.

At 177.08, the nine-day EMA may provide the first support for EUR/JPY. Below that lies 175.07, the 12-month low recorded on 30 October, followed by the descending channel’s lower boundary near 174.20. Should the cross break below the channel, it would pave the way for a move towards the region of 169.72, the 15-month low.

For an advance, EUR/JPY may first test resistance near 178.50 at the descending channel’s upper boundary, before reaching the 50-day EMA at 178.69. Breaking decisively above this medium-term moving average would trigger a bullish reversal, supporting a move towards the area around 187.95, the all-time high recorded on 17 April.

What does the fall in Euro and US inflation swaps to two-month lows signal?

Market-based inflation expectations were sharply repriced alongside the shift in spot inflation data, according to analysts at Deutsche Bank. They note that this “led to a huge decline in inflation expectations, with the Euro 1yr inflation swap (-25.9bps) down to a two-month low of 3.10%, whilst the 1yr US inflation swap (-24.9bps) hit a two-month low of 2.16%.” In their view, the simultaneous decline in Euro and US 1-year inflation swaps highlights the speed at which near-term price pressures are being revised lower on both sides of the Atlantic.

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