The EUR/JPY currency pair has experienced downward pressure, sliding near the 181.20 region during the early European session on Monday. Comments from a Japanese policy adviser suggest that the Bank of Japan is likely to implement an interest rate increase in September. The daily chart reflects a clear bearish near-term bias for the cross, with prices positioned below both the 20-day Bollinger middle band and the 100-day moving average, maintaining a capped broader structure following recent declines.
Monetary Policy Outlook and Central Bank Trajectory
Market attention remains focused on the policy trajectory of the Bank of Japan and its departure from previous ultra-loose monetary measures. Following the anticipated September rate hike, the central bank is expected to follow up with another increase by January of the following year, after which adjustments may normalize to roughly once every six months. Over the past decade, the protracted adherence to an ultra-loose policy stance created a significant divergence between Japanese authorities and other major central banks, particularly the United States Federal Reserve, weighing heavily on the Japanese Yen.
Technical Barriers and Key Price Levels
On the upside, immediate resistance for EUR/JPY is aligned near the 181.40 level, corresponding to the lower Bollinger band acting as overhead supply. Further hurdles include the August 10 low of 182.70, ahead of a dense resistance zone formed by the 20-day simple moving average at 184.45 and the 100-day moving average at 184.90. On the downside, initial support rests at the September 4 low of 180.23, followed by the key psychological level at 180.00. Sustained selling pressure beneath this threshold could expose the August 3 low of 179.37.
Broader Market Dynamics and Cross-Asset Movements
Wider currency markets reflect diverse cross-currents, with the Australian Dollar holding near multi-month highs and the safe-haven US Dollar drawing support from rising employment figures and geopolitical tensions. Concurrently, rising energy prices and persistent inflationary concerns continue to shape global macroeconomic sentiment, influencing currency valuations across major pairs.
