FX.co ★ EUR/JPY

EUR/JPY has edged back toward 176.00 after three consecutive sessions of losses, and the rebound is less a vote of confidence in the euro than a pause in a market that hasn't decided which central bank to believe. Start with the European Central Bank. Policymakers have now left rates untouched at 2% for a third straight meeting, describing the current setting as "well-calibrated" and emphasizing a data-dependent, meeting-by-meeting approach with no pre-commitment to any particular path. The justification is straightforward: eurozone inflation has settled close to the 2% target, with headline HICP easing to around 2.1% and core holding near 2.4%, while growth continues at a modest but positive pace. In practical terms, that removes the urgency for either a cut or a hike, which leaves the euro without a fresh policy catalyst to lean on. On the Japanese side, the picture is more complicated, and that complexity is precisely what has kept this pair from breaking down. The Bank of Japan held its policy rate at 0.5%, with two board members pushing for an immediate move to 0.75%, a split that reveals genuine internal disagreement rather than consensus. Governor Kazuo Ueda has repeatedly stressed that more data is needed before the next hike, particularly on wage momentum, and has declined to offer any preset timeline. Japan's inflation backdrop supports the hawkish case, with Tokyo CPI running at 2.8% year-on-year and core measures comfortably above target. Yet there's a political counterweight that markets cannot ignore: Prime Minister Sanae Takaichi's government is preparing an aggressive fiscal stimulus package exceeding ¥13.9 trillion, complete with tax reductions, energy subsidies, and technology investment. Government borrowing and spending at that scale tends to weaken the currency it backs, and roughly 65% of surveyed economists have flagged concerns about Japan's fiscal health as a result. Layered on top is France, where political instability has become a persistent drag on the euro. The resignation of Prime Minister Sébastien Lecornu after less than a month in office sent French borrowing costs surging and pushed the euro lower against major peers, and the risk premium embedded in French assets has not fully unwound. That combination, a patient ECB, a divided BOJ, generous Japanese fiscal policy, and French political fragility, explains why EUR/JPY sits near 176.00 rather than trending decisively in either direction. The rate differential still favours the euro, but the momentum behind that advantage has softened considerably.

EUR/JPY is trading near 176.00, and the moving averages are arranged in a manner that tilts the structure bearish on the medium horizon while leaving a narrow foothold on the short one. On the H4 chart, the 50-period SMA sits at 176.00, essentially at the current price, while the 200-period SMA rests well above at 178.20. On the H1 chart, the 50-period SMA is at 175.95 and the 200-period SMA at 177.00. Read individually: the H1 50-period SMA at 175.95 is the immediate dynamic floor, just five pips beneath the market; the H4 50-period SMA at 176.00 coincides almost exactly with current price, making it the pivot that determines whether this bounce has legs; the H1 200-period SMA at 177.00 forms the first meaningful dynamic ceiling overhead; and the H4 200-period SMA at 178.20 represents the broader barrier that would need to be reclaimed for the medium-term trend to shift. The fact that price is below the H1 200-period and H4 200-period averages confirms the descending channel remains intact. On the downside, initial support rests at 175.50, followed by the psychologically significant 175.00, then 174.50, with 173.80 marking a deeper demand zone where buyers have historically appeared. On the upside, first resistance sits at 176.50, then 177.00 where the H1 200-period average converges, followed by 177.80 and then 178.20, aligning with the H4 200-period average. If buyers hold above 175.95 and push through 176.50, the pair could test 177.00, and a daily close above that level would be the first genuine evidence that the descending channel is fracturing, opening 177.80 and potentially 178.20. If 175.95 gives way under sustained selling, expect a slide toward 175.50 and then 175.00, which would leave all four averages firmly overhead and keep the bearish structure intact. The bias leans lower while price trades beneath the H1 200-period average, but the immediate call hinges on whether that 175.95–176.00 shelf holds, and on whether Tokyo's fiscal plans or Paris's political troubles deliver the next decisive signal.