FX.co ★ EUR/JPY

Technical and Fundamental Analysis of the EUR/JPY Pair EUR/JPY slipped toward the 184.70 region at the close of the latest session, reflecting increasing downside pressure as stronger Japanese economic data boosted expectations for further Bank of Japan policy tightening. At the same time, investors reassessed the European Central Bank’s future rate path. The cross experienced elevated volatility throughout the session, trading within a broad range before settling near its daily lows as sellers maintained control across shorter-term timeframes. Market attention remains focused on the European Central Bank's upcoming policy meeting, where policymakers are expected to unveil updated macroeconomic projections. Recent commentary suggests the ECB's new forecasts will incorporate higher market-implied interest-rate assumptions through the end of 2026, reflecting a more restrictive monetary-policy environment than previously anticipated. However, the forecast framework is expected to rely on assumptions finalized in late May, meaning the latest inflation readings may not be fully reflected in the central bank's updated outlook. Economists expect the ECB to revise its headline and core inflation forecasts higher than its previous baseline projections. Elevated energy costs and persistent service-sector inflation continue to complicate the disinflation process across the Eurozone. While policymakers are still expected to proceed with policy normalization, investors are increasingly questioning how much additional tightening can realistically be delivered without placing further pressure on already fragile economic growth. Meanwhile, developments in Japan have provided meaningful support for the yen. Fresh economic data revealed that real wages increased by 1.9% year-over-year in April, surpassing market expectations and reinforcing signs that household purchasing power is gradually improving. Although consumer spending remained negative on an annual basis, the contraction was significantly smaller than anticipated, suggesting domestic demand may be stabilizing after several challenging quarters. Additional labor-market data strengthened the bullish case for the Japanese currency. Nominal wage growth accelerated to 3.5% year-over-year, marking the strongest increase since late 2024 and extending a remarkable streak of wage gains above 3% for three consecutive months. This represents a milestone not seen in more than three decades and signals that inflation-driven wage adjustments are becoming more deeply embedded within the Japanese economy. Looking ahead, EUR/JPY traders will closely monitor the ECB meeting, updated inflation projections, and comments from Bank of Japan officials. Any indication that the ECB may adopt a more cautious stance toward future rate hikes while the BoJ remains committed to policy normalization could further weigh on the cross. Additionally, global risk sentiment, bond-yield movements, and geopolitical developments will remain key drivers of short-term volatility. EUR/JPY has shifted into a corrective bearish phase after failing to sustain gains above the 186.00 region. On the H4 timeframe, the pair is trading below both the 20-period and 50-period Simple Moving Averages, highlighting deteriorating momentum and confirming seller dominance. The downward alignment of these moving averages continues to reinforce the short-term bearish structure. A significant H4 supply zone remains positioned between 185.80 and 186.30, where repeated rejection candles and institutional selling activity have prevented further advances. On the downside, the primary demand area is located between 184.00 and 184.50, representing an important support cluster that has previously attracted buyers. A decisive breakdown beneath this zone could expose the next downside target near 183.60–183.80. The H1 chart further supports the bearish outlook. Price continues to trade below both the 20 SMA and 50 SMA, while intraday rallies have repeatedly encountered selling pressure around the 185.20–185.60 region. Immediate support remains near 184.40–184.70, where short-term buyers may attempt to defend the market. However, the overall structure continues to favor sellers unless price can reclaim key moving-average resistance levels. For the coming sessions, traders should closely watch the 184.40–184.50 support zone and the 185.20–185.50 resistance cluster. A sustained move above the H4 50 SMA would be required to neutralize the current bearish bias and reopen the path toward 186.00 and beyond. Until then, the combination of strengthening Japanese fundamentals, rising BoJ tightening expectations, and weakening technical momentum suggests that EUR/JPY remains vulnerable to further downside pressure.