The euro weakened against the Japanese yen during early European trading on Thursday, pushing the currency cross down near 177.90. On the daily chart, holding below the 100-day Simple Moving Average keeps the broader technical bias tilted to the downside. At the same time, a neutral Relative Strength Index indicates that further sideways consolidation remains possible over the coming sessions. Live market data shows the pair trading at 177.73, up 0.07 percent from its prior close of 177.60, within a 52-week band spanning 175.07 to 187.93.
Diverging Central Bank Postures Drive Volatility
Crosscurrents in central bank rhetoric are actively shaping expectations on both sides of the currency pair. An official from the Bank of Japan highlighted potential leeway to accelerate the pace of interest rate increases. Japanese monetary authorities are currently evaluating the economic implications of Middle East geopolitical tensions, expanding demand spurred by Artificial Intelligence technologies, and shifts in foreign exchange markets. The central bank's published minutes revealed that board members agreed on the need to continue raising borrowing costs, providing fundamental support to the yen.
Conversely, European Central Bank policymaker Nagel delivered an unusually hawkish address, which scored an 8.2 on the FXS Speechtracker metric compared to a historical baseline of 7.0. Nagel characterized an interest rate hike in December as very likely to be necessary. His commentary underscored that inflationary pressures are exceeding earlier projections and approaching an adverse scenario, reflecting a pronounced tightening bias that provides underlying backing to the euro.
Nagel further stated that any surge in energy prices must be prevented from triggering widespread inflationary momentum across the euro area economy. While acknowledging domestic fiscal concerns in France, he characterized government budgetary matters as remaining entirely outside the mandate of monetary policy. The combination of heightened inflation warnings and expressed confidence in fiscal stabilization keeps the policy focus strictly on price stability, reinforcing a hawkish stance for euro participants.
Daily Technical Levels and Momentum Indicators
From a technical standpoint, the daily timeframe for EUR/JPY exhibits characteristics of an ongoing corrective phase. The cross continues to trade beneath its 100-day Simple Moving Average, sustaining a broader bearish predisposition despite its recent rebound away from the lower Bollinger Band. The pair has successfully reclaimed support at the 20-day Bollinger SMA, signaling a degree of short-term stabilization. Daily RSI stands at 53.4, transitioning into neutral-to-positive territory and indicating that downside momentum has subsided without yet invalidating the overarching resistance imposed by higher moving averages.
Downside support is initially anchored by the middle Bollinger Band at 176.90, followed by the November 2 swing low recorded at 175.70. A decisive move beneath this lower threshold would expose the lower boundary of the Bollinger Band situated near 175.30. On the upside, initial resistance aligns with the upper Bollinger Band near 178.45, an area where selling interest could resurface. Clearing this barrier would open a trajectory toward the 180.00 psychological threshold, ahead of the more consequential 100-day SMA resistance standing at 181.70.
According to live technical indicators, the 14-period RSI reads at 52, while the MACD registers -0.53 against a signal line of -0.79, generating a positive histogram reading of 0.27. Moving averages reflect an established long-term downward trend, highlighted by a death cross where the 50-day EMA at 178.71 trades below the 200-day EMA at 181.81. The 20-day EMA sits at 177.09, while the 50-day SMA is 178.78 and the 200-day SMA is 183.16. The 20-period Bollinger Bands bracket price action between 175.41 and 178.28, around a middle band of 176.85. The 14-day ADX sits at 22, pointing to a rangebound environment, with stochastic fast and signal lines at 78 and 70 respectively. Daily volatility measured by the 14-period ATR stands at 1.23. Key pivot metrics position the central pivot at 177.82, with resistances R1 at 177.96 and R2 at 178.19, and supports S1 at 177.59 and S2 at 177.44.
The Evolution of Bank of Japan Monetary Strategy
As Japan's monetary authority, the Bank of Japan is responsible for currency issuance and macroeconomic management to achieve sustained price stability, defined as a target annual inflation rate of approximately 2 percent. To counteract decades of low inflation and economic stagnation, the central bank initiated an aggressive ultra-loose monetary regime in 2013 centered on Quantitative and Qualitative Easing. Under this program, the institution expanded liquidity by purchasing sovereign and corporate debt securities.
The central bank deepened its interventions in 2016 by implementing negative policy interest rates and establishing yield curve control over 10-year Japanese government bonds. Over time, this massive liquidity provision triggered substantial depreciation in the Japanese yen against international currencies. This divergence intensified markedly throughout 2022 and 2023 when international central banks executed steep interest rate increases to counter multi-decade inflation highs, leaving Japanese policy rates far behind and exacerbating yield differentials.
A turning point occurred in March 2024, when the Bank of Japan raised interest rates and formally stepped back from its ultra-loose policy framework. The persistent weakness of the domestic currency, alongside escalating international energy costs, had pushed domestic consumer prices above the official 2 percent benchmark. Additionally, rising wage growth within the domestic economy provided the necessary economic foundation to begin standardizing monetary conditions.
Broader Trends Across Foreign Exchange and Commodity Markets
Other major financial assets reflect notable shifts across the global landscape. The US dollar has faced downward pressure following the Democratic sweep of both houses of the US Congress in the midterm elections and amid diplomatic developments regarding Iran. In this setting, the AUD/USD currency pair maintained footing above 0.7000 during Asian trading on Thursday, preserving gains from its recent three-week low, though traders remained cautious ahead of the upcoming US Non-Farm Payrolls release.
Concurrently, the USD/JPY cross traded with a negative tone for a second consecutive session on Thursday. Hawkish minutes confirming the Bank of Japan's intent to push borrowing costs higher, paired with persistent concerns over direct currency intervention, bolstered the yen against a softer dollar. In precious metals, spot gold advanced toward $4,135 per ounce in Asian trading, touching its highest valuation in nearly two weeks as declining US Treasury yields and dollar weakness spurred demand. In cryptocurrency markets, Ripple and Stellar advanced as downward momentum receded; XRP moved above $1.30 after exiting a descending channel, while XLM sustained levels above $0.168 toward key resistance at $0.173.
